Sure, there are the big and basic questions you should ask when looking at a business to buy – but there are also some more unusual (but very telling) questions that will help you figure out if this really is the right business for you.
What do we mean by “the right business for you”? Entrepreneurship is tough, and along with a decent amount of personal drive a successful entrepreneur has to love what they do. Nothing other than passion is going to help you when the hours get long and the money gets tight. For this reason, it is critically important that you decide what your ultimate goals are for business ownership before you start shopping around.
You should ask yourself what you want your life as a business owner to look like. Are you willing to work crazy hours for a big financial return, or are you leaning more towards something a bit more managerial but not completely life-encompassing? Do you thrive on being in control, or do you like to delegate?
The answers to these questions will be important for determining what kind of business and even what individual business would be best for you.
Once you have the answers to your soul-searching in hand, you may be wondering where on a tax return or P&L you can figure out if a business fits with your entrepreneurial desires. The answer is, you probably won’t be able to discern something like the level of owner involvement from just the numbers.
Perhaps, then, you should just ask sellers how many hours they work a week, or how many employees they have? These answers will help, but the three questions that will truly get at the life you will have as owner of the business are these:
When was the last time the seller went on vacation?
How long was the vacation?
Who was in charge and were there any issues while they were away?
These questions might not seem profound, but the answers can tell you as a buyer a whole lot about what the seller’s day-to-day life is like.
If the answer is “never” to the last time the seller took a vacation, then as owner of this business – it will clearly live and die with you. This type of business would be good for someone very driven and passionate who is looking for a good financial return.
If the sellers do take vacation, but they only go for a day or two at a time, then this is likely a business that needs a fair degree of owner oversight and may even be a business that can’t function without you at the helm. This is great for those of you who love control, but probably not a good choice for those who want to be fairly hands-off.
If the sellers regularly go on vacation for a week or two without complaints about major issues while they are gone, then this business likely has a trustworthy and capable management structure that allows the owners this type of freedom. The downside to a great management staff? You get what you pay for, so in many cases this type of business sends the ownership home with less, but the trade off for time off may interest you.
When trying to decide on the right business, first decide what you want your life to look like, then ask the three vacation questions. They will tell you volumes about your life as the future owner of the business.
Are you a buyer who wants to know more about how to decide what business would be right for you? Have you ever asked the vacation questions? Please leave us a comment or question here, we would love to hear from you.