How to Get Expert Information for the Exact Business You’re Thinking of Starting
In this post, you’ll find strategies to get inside information from qualified people that will give you the inside scoop on the exact business opportunity you’re considering. You’ll get tips from people that have many years of experience and are willing to share their experiences with you. Please note this technique is not sneaky or deceptive, as you’ll see from the benefits outlined below.
Let’s Get Started
The key to this technique is keeping an open mind and being honest.
What you are going to do is contact business owners that have their businesses listed for sale. You will check out their business, interview them, and check out their profits and sales, costs, etc. You will ask them various questions to get inside information about their operation and the industry.
As mentioned above, this is not sneaky, and here’s why. If you keep an open mind, you may find it’s better to purchase the business you’re looking into. It may be profitable and a good fit, and you could get started a lot quicker than starting from scratch. For more, see Buy A Business or Build one From Scratch?
Step 1: Search Business Listings
Search for businesses that are for sale. You can look through your local paper, and speak with real estate agents. Online you can find hundreds of businesses for sale. Make a list of those companies that match the business you want to start.
Step 2: Make Contact
Contact owners and brokers to set up a meeting. For those that you can’t visit in person, you can have a face-to-face online meeting or phone call, and if it looks promising, you can then travel to check out the business if needed.
Step 3: Prep Work
You need to make a list of questions to ask the owner. Below you’ll find some sample questions; modify your list as you see fit.
Question 1: Did You Start This Business or Buy It?
If they bought the business, your next question is, how long have you had it. If it’s just a short time, this might be a business purchased to flip for a profit.
If it’s a flip, you may not get a lot of the information you’re looking for because the owner is in for a quick profit and may not be experienced enough to offer reliable advice.
Question 2: How Long Have You Had This Business?
This will reveal how much experience the owner has.
Question 3: Why Are You Selling the Business?
This can be for several reasons, a few are listed:
a.) The owners lost interest.
This may indicate the business hasn’t been taken care of and is run down with a poor reputation. You might want to look for signs of neglect, now that you’re aware of this, the signs may pop out at you.
b.) They don’t have the help they need.
If they can’t hire people to help them run the business, you want to find out why? Is it because no one wants that type of job, or could it be the business doesn’t make enough money to support the staff needed?
c.) The owner has a problem with the business.
If you can resolve this problem, this could be a great business opportunity.
d.) They want to retire or other life-changing situations.
This is a great opportunity to find out as much as you can from their years of experience.
Question 4: Would You Ever Consider Opening a Similar Business?
This question can reveal if the owner plans to start a business that may compete with this one.
Question 5: How Do You Get Customers, and What Types of Advertising and Marketing Do You Use?
The answer to this question will reveal how active they are in marketing and reveal any missed opportunities as well as advertising avenues they haven’t considered.
Question 6: What Are Your Advertising Costs, and What Is the Return on Investment?
This answer identifies how aggressive the advertising is and how well it’s performing. Suppose the answer is I don’t know the return on investment (ROI). In that case, they advertise blindly with no tracking or accountability or perform brand marketing only. If the business is doing well with poor advertising, you may be able to increase profits and revenues with your marketing skills.
Question 7: Are Your Customers Repeat Buyers or One-Time Customers?
Gaining a customer takes time and it’s costly. You want repeat customers for stability in a business.
Question 8: What Do You Like the Most About This Business?
This answer reveals some of the business’s benefits and the positive aspects of running it.
Question 9: What Are the Biggest Challenges Involved in Running Your Business?
The answer will identify any problem areas and opportunities for improvement. Whether you buy this business or start your own you’ll want to spend some time on this area and dig deeper with the answers the owner gives you.
Question 10: If You Had to Start From Scratch, What Would You Do Differently?
This answer will identify any opportunities and regrets. Note the regrets so you can avoid similar problems and note any missed opportunities you can take advantage of.
Question 11: Is There an Opportunity to Finance the Business Through You?
Financing through the owner may be a way to them a down payment. And give them monthly payments, with a better than the bank interest rate. Some people will be interested in this option if they don’t need the money. And some won’t because if you fail, they have to take the business back and pick up where you left off.
Another option is if the business has debt, pay the owner his share, and assume the debt.
I had a friend that couldn’t sell his business. I asked him why he wanted to sell it. He said he wanted to start a new business and just wanted to pay the business’s debt. I told him to sell the business with a low down payment, and the new owner assumes the debt. After taking my advice, He sold it in a week to one of the employees. It was a win-win for both parties.
Question 12: How Long has your staff been with you?
If the owner has had the staff for a long time, that’s a good sign. If employee turnover is high then there is a problem with, job, management, the work environment, or the pay. It’s a good idea to ask why employees don’t stay in the job for long periods. And you’ll need to consider if you can fix the problem if you decide to take over.
Question 13: Are there any lawsuits or legal problems I should be aware of?
If there are any legal problems take some time to get the details. This is something you want information about whether you take over the business or to learn from the issues if you start your own business.
Question 14: How much revenue came in the past 6 months?
Revenue is vital to the survival of any business. You’ll want to know the earning potential of the business. You’ll also want to know how much of the revenue is profit. Having a business with a lot of revenue but very little profit is not a good scenario and having a lot of profit with little revenue is also not a good scenario. You need a good flow of revenue with a healthy profit margin.
One More Way to Get Qualified Information
You can contact business owners that would be willing to give you some advice about starting your business.
The way you want to approach this is to interview business owners that you will not compete against. So you may need to seek owners out of your area so you don’t post a threat to them.
Unlike a business owner looking to sell their business, you may have to go through many “no’s” before you find someone willing to share their experience and knowledge.
My recommendation is, to be honest. Tell the owner where you’re planning to operate your business. It would be best to assure them that you won’t be a threat by competing with them.
You may have to get creative to find ways to get people to speak with you. You could offer to share your experience once you get started, you could offer to pay them a consulting fee, come up with a joint venture, etc. Offer something you’re good at in return; for example, if you’re good with online marketing, you could offer some advice in that area, where they can benefit.
Your Next Step
You’ll find a lot more in the resources below regarding the questions and considerations when buying a business. You’ll want to go update your list with questions and keep in mind each industry will have specific questions. Once you have your list ready, you want to start talking to the owners that have their business for sale
One more key to getting inside information
Just like you did above you’ll want to do the same thing by looking into franchise opportunities. Now with a franchise, you can get a lot of the information mentioned above from the companies that offer franchise opportunities.
Step 4: Due Diligence
The above are all questions and considerations when speaking with business owners and when you find a business that looks like it may be the right opportunity. Then you’ll need to do your due diligence. This is an important step that you must take before you make any plans to move ahead. For me see, Tips For Performing Due Diligence For Buying a Business.
Now that you have completed the steps above, you may have found an opportunity that is worth pursuing and you’re ready to get started by taking over an established business. On the other hand, if you don’t find a business that looks like a good match, you now have a lot of inside information you wouldn’t have had if you didn’t go through this process.
Below you’ll find a long list of resources that offer tips and insights that will help you when considering the purchase of an existing business. The articles are written by various authors offering diverse perspectives on the topic. Going through the articles will give a strong overview of what’s needed to buy a business.