Key Considerations In Preliminary Screening Of The Business You Wish To Buy

We all would want to buy a business that perfectly fits our requirements. That is why we need to see to it that we check every details of the business you are interested in before handing out the money.

In your preliminary screening of the business, see to it that you will perform these 3 key considerations intellectually before jumping into the next step.

Interview the Owner. In interviewing, the trick is to get the owner talk and to listen actively to what you hear. In a productive interview, the interviewee is encouraged to do 90 percent of the talking. Listen for discrepancies and distortions; let the owner talk, but when you want to check a point, guide the conversation by a well chosen question. The owner will try to make a positive (and usually glowing) sales pitch. You have to be keen on this because youll search for hard data that will allow you to form your own opinion in the checking youll do later. Your task will be to remember the main points and verify them.

Observe the Premises. Are things neat and tidy? Is a retail store selling fashion dresses for instance has attractive interiors? Would you like to walk into the store as a prospective customer? If for a manufacturing operation, is the shop well laid out? Does the flow of the manufacturing process follow the rules? How efficiently is the inventory or raw stock managed? If for a service organization like an online digital printing shop, how are client contacts made, and how are jobs scheduled especially when they are having bulk orders on print postcards for instance? Do procedures ensure adequate attention to the needs of customers? Dont hesitate to raise and let the owner answer questions like those above in your preliminary survey of the business to help you decide whether to buy the business or not.

Check the Financial Data. Before you leave, make a first check of financial data. Ask to see a current balance sheet -- what assets do the business own and how much does it owe. Look at the last statements for the last two or three years, and the current one too. Does the income show a reasonable pattern? Or is it steady by the month? Check several years of income tax statements, for example the last five years if the company has been in the business that long. And by all means, get copies of these items to take along with you for further study.

These 3 considerations can help you decide whether to pursue to the next level of assessment of the business or just end it right there and start looking for another business to buy.