Buying an existing business can be one of the fastest ways to become an entrepreneur. Instead of starting from scratch, you’re stepping into a company that already has customers, cash flow, employees, and brand recognition. But before you sign the purchase agreement, you need to ask the right questions to make sure the deal is as solid as it looks.
Whether you’re buying a neighborhood bakery, a digital agency, or a franchise, these 20 questions will help you evaluate the business like a pro and protect your investment.
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Why are you selling the business?
This is the first and most important question. The seller’s motivation reveals a lot. Are they retiring, burned out, facing new competition, not willing to invest in new technology, or struggling with declining revenue? Their honesty, or hesitation, can guide how deep you dig into other areas.
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How long have you owned the business?
Longevity matters. A long-term owner likely understands the market well, while a short-term owner may be offloading problems they couldn’t solve. Ask what changes they made during their tenure and how those changes affected performance.
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What are your current sales and profit trends?
You’re not just buying a business; you’re buying its cash flow. Ask for at least three years of financial statements and look for consistent revenue, profit margins, and seasonality. Declines or inconsistencies are red flags that need explanation.
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Who are your key customers, and what percentage of sales do they represent?
Customer concentration is a major risk factor. If one client makes up more than 30 percent of revenue, losing them could collapse the business. Diversified income streams are a sign of stability.
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What are your biggest ongoing expenses?
Knowing the cost structure helps you project profitability. Ask about payroll, rent, insurance, inventory, technology systems, and supplier contracts. Your goal is to understand which costs are fixed and which can be reduced or renegotiated.
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Is this business carrying any debt?
Some debts may transfer to the new owner, such as loans, unpaid taxes, or lease obligations. Ask for a complete list of liabilities so you can factor them into your offer price or negotiate them out.
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What assets are included in the sale?
Clarify whether you’re buying real estate, inventory, intellectual property, customer lists, or just the brand name. Sometimes “business for sale” doesn’t include key assets, which can drastically affect value.
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How dependent is the business on you or key employees?
How dependent is the business on you or key employees?If the company’s success hinges on the seller’s personal relationships or one star employee, you could face trouble retaining customers after the transition. Ask how they plan to help transfer trust and knowledge to you.
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What is your employee turnover rate?
Stable, experienced staff can be a huge advantage when acquiring a business. High turnover could mean cultural issues, poor management, or pay inequities. Talk with key employees if possible and ask about morale.
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What systems and processes are in place?
A business with strong standard operating procedures (SOPs), documented workflows, and automation is easier to scale and less reliant on individual talent. Ask to review their CRM, accounting systems, and employee manuals.
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How do you market and attract customers?
You need to understand the company’s sales engine. Is growth organic, referral-based, or dependent on paid ads? Ask for marketing metrics like cost per lead, conversion rate, and customer lifetime value.
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Who are your main competitors, and what differentiates you?
The seller’s understanding of their competition will tell you a lot about market maturity. Ask what they do better or differently, and where they’ve lost ground. Competitor insights can reveal untapped opportunities.
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What are the biggest challenges the business is currently facing?
Every business has pain points. Ask what obstacles in supply chain, staffing, regulation, or technology the seller has struggled with. You’ll need a realistic picture of what you’re inheriting.
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What growth opportunities have you not pursued?
Many small business owners plateau at a certain size. Ask what marketing, partnership, or expansion ideas the current owner didn’t have time or capital to pursue. These could become your growth levers after acquisition.
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Can I review your financial records with my accountant?
Can I review your financial records with my accountant?Always verify the numbers independently. Ask for tax returns, balance sheets, and profit-and-loss statements. An accountant can help uncover hidden liabilities, inflated assets, or irregular bookkeeping practices.
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How is customer satisfaction measured?
Request access to customer reviews, retention data, or satisfaction surveys. A loyal customer base is one of the most valuable assets you can acquire, and it signals long-term sustainability.
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Are there any pending legal issues or disputes?
Legal liabilities can follow you after the sale. Ask about pending lawsuits, employee claims, vendor disputes, or compliance violations. Get documentation to confirm that everything is disclosed.
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What agreements or contracts will transfer to me?
Leases, supplier agreements, licenses, and vendor relationships must be reviewed. Some contracts require landlord or vendor approval before transferring to a new owner—don’t skip this step.
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What kind of transition period are you providing after the sale?
Most sellers offer a transition period to help you learn the ropes. Define how long they’ll stay, what responsibilities they’ll cover, and whether that support is included in the sale price or billed separately.
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What would you do differently if you were starting over today?
This question often reveals the seller’s regrets or missed opportunities. Their hindsight can become your foresight. You’ll gain insights that don’t show up in spreadsheets or contracts.
Building Trust Through the Right Questions
When you buy a business, you’re not just purchasing products or property—you’re buying people, systems, and reputation. Asking smart questions isn’t about interrogation; it’s about understanding how the business truly operates so you can build on its strengths.
Use these questions to assess risk, validate value, and develop trust with the seller. A good owner will respect your due diligence—it shows you’re serious about protecting the legacy they’ve built.
Buying an existing business can save years of trial and error compared to starting from scratch. But the key to a successful acquisition is clarity. The right questions help you uncover red flags, spot hidden opportunities, and negotiate a fair deal.
Before signing anything, consult your accountant, attorney, and business advisor to review the financials and legal documents thoroughly.
If you’re serious about stepping into business ownership, join Melinda Emerson, the SmallBizLady, at the Next Act CEO Summit, where you’ll learn how to find, fund, and buy the right business or franchise to match your next act.
Buy your ticket today at: https://SmallBizLadyUniversity.com/NextActCEOSummit
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