If you have dreams of becoming a business owner and wish to buy a business in Nashville (aka “Music City”), you have an opportunity to get in on the ground floor of an area experiencing explosive growth. But before you start your search, there are 10 pressing questions you should be prepared to ask the seller. Keep reading for insight into these.
Question 1: What is the most challenging aspect of owning this business?
Do not be shy about asking the current business owner about their own hurdles. This might be the most important question on the list. It is challenging to run a business, but knowing what the current owners are facing is a great way to decide if you are up to the task.
Question 2: Are there things you would do differently if you were starting out in this business today?
Ostensibly, the person you are buying from is an expert regarding that particular business. Before you buy, however, pick their brains. They can probably give you some insight into the local climate. Since Nashville is growing rapidly, you might find that keeping up with demand is one of their challenges. If that is the case, they might do something as simple as start with more capital or hire someone who knows the ins and outs of the town if they bought today.
Question 3: How Did you determine the asking price?
Chances are, their business broker helped them come up with this number. However, asking this question puts the seller in a position to defend their dollar value, so you can determine if the number is accurate. It can give you a great amount of insight and help you justify your own financial commitment.
Question 4: What will you do if you can not sell?
Just as you have reasons that you want to buy a business, the seller has circumstances that have led them to put it on the market. Asking this question can help determine if you have any bargaining power.
Question 5: Can you provide a paper trail of financials?
Do not spend a dime until you can see where every penny is going. When you buy a business, how accurate their financials are will determine if you get what you paid for. Most sellers can pretty quickly offer you a rundown of all incoming and outgoing monies. If not, keep in mind that Nashville is not exactly a small town – you can find another business.
Question 6: What are some skills or personality traits that have helped you be successful?
Buying a business is not just about the money you can make. Another point to consider is whether or not it is actually a good fit for you. You may have already run one business successfully, but that does not mean that the skills you have are the only ones you need.
Question 7: Are there any pending lawsuits, potential lawsuits, or past legal indiscretions associated with the business?
This is a big one. Although you should not be held liable for anything that happened before taking ownership, knowing about any legal action taken against the company is hugely important. In addition to avoiding headaches down the road, this can also put you on the right track toward researching the business’s reputation. When you buy a business, you usually announce that it is under new ownership. Unfortunately, if prior legal follies made Nashville’s news, you might be buying into a failing endeavor.
Question 8: Do the employees plan to stay?
Of course, the current owner can not speak for everyone. Sometimes, employees use a new acquisition as an opportunity to change jobs. But it is important to get to know the overall feelings about the takeover. One reason is that you will want someone to walk you through all of the daily procedures. When you buy a business, you can not just go in and change things up on day one. You will likely want to make sure that you have at least one trustworthy right hand.
Question 9: Is everything documented?
In the off chance everyone decides to bail, you will sleep better at night knowing that all of the company’s procedures, processes, and contacts are well documented.
Question 10: If a specific customer or vendor left, would that put the business in jeopardy?
Some businesses rely on a single customer or a small number of customers to survive. Do not buy a business until you know that it can sustain itself even if your biggest source of revenue disappeared. Similarly, dive deep into the current owner’s vendors of choice and make sure they can be replaced if necessary.
Nashville is growing. And people like to shop local. When you buy a business in the Athens of the South, however, you can not rely on good old-fashioned Southern hospitality to keep you afloat. You have to ask lots of questions and make sure the answers fit with your ideal vision of success.