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If you find a business that you would like to buy, you will need to consider a number of points before you decide whether to purchase it. Take a good, close look at the business and answer the following questions. They will help you determine whether the business is a sound investment. In most cases, buying an existing business is less risky than starting from scratch.

  1. Why does the current owner want to sell the business?
  2. Does the business have potential for future growth, or will it’s sales decline?
  3. If the business is in decline, can you save it and make it successful? Is the business in sound financial condition?
  4. Have you seen audited year-end financial statements for the business?
  5. Have you reviewed the most recent statements? Have you reviewed the tax returns for the past five years?
  6. Have you seen copies of all the business current contracts?
  7. Is the business now, or has it ever been, under investigation by any governmental agency? If so, what is the status of any current investigation?
  8. What were the results of any past investigation? Is the business currently involved in a lawsuit, or has it ever been involved in one? If so, what is the status or result?
  9. Does the existing business have any debts or liens against it? If so, what are they for and in what amounts?
  10. Does any single customer account for a large portion of the sales volume? If so, would the business be able to survive without this customer?
  11. Does the business experience high employee turnover? If so, why?
  12. What benefits does the present business offer its employees?
  13. Will the change of ownership cause any changes in personnel?
  14. How many customers does the existing business serve on a regular basis?
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