Once you have made the decision to sell your business, you should take some time to think about possible buyer questions you may be asked. Potential buyers don’t know the business or the industry like you do, so their ability to ask detailed questions is the best way for them to determine whether or not this industry and business is the right fit for them. Having an idea of what they may ask, and knowing how to answer these questions, is an important step in the process
Buyer Question #1: What is something that should be highlighted about the business?
Every business has something about it that makes it unique compared to its competitors. Perhaps your business has a large and diverse customer base, maybe its internal systems are more advanced than the average company, or it has specific or niche certifications. This information is something buyers will want to know, and will ask about. Being able to explain and show what makes your business different will go a long way in getting buyers interested and excited about your business.
Buyer Question #2: Is there room for the business to grow under the new ownership?
A buyer will want to know if there are opportunities available for them to grow the business and its revenue. If there were things you have tried before (different promotions, new products / services), mention them. This information lets a buyer know what works, what doesn’t, and why. You may also have some growth ideas that you weren’t able to implement yourself, but could be effective. This could include steps such as creating / improving the business’s online presence, offering new products / services, increasing advertisements and promotions, etc. Mention these ideas as well so a buyer knows there are plenty of opportunities for them to grow and improve the business and its bottom line.
Buyer Question #3: How involved in the business is the current owner?
Buyers are also curious about how much you, as the current owner, currently work in the business. They will specifically want to know about your duties, and how many hours per week you work in the business. Remember, they are trying to see if the business is a good fit for them and their specific skill set, so try not to leave anything out.
Buyer Question #4: What is the customer breakdown like?
Potential buyers are going to want to know where the revenue in the business comes from. You should be prepared to list your major customers (If you’re concerned about confidentiality, buyers should have signed a non-disclosure agreement at this point in discussions. The importance of managing confidentiality, and a signed NDA, is discussed more in the blog Why Keeping the Sale of Your Business Confidential Is Important).
When listing who the major customers are, it is good to include what percentage of revenue each customer accounts for. This way, buyers are able to see how diverse your customer base is. These are important characteristics of the business that a buyer will need to know at some point and it is important to manage the release of this information only at the appropriate time during the deal. A professional merger and acquisition advisor or business broker will carefully guide you through this process and ensure it is not disclosed to early in the process nor too late.
Buyer Question #5: Is there a core group of employees who are trusted and will remain with the business?
Part of the expectation when purchasing a business is that current employees are qualified, trusted, and will stay with the business once it is sold and under the new ownership. Buyers don’t want to be hiring and training staff when they’re just starting in the business themselves, so being able to tell them that employees are trustworthy and will stay sets the buyer’s mind at ease.
Preparing yourself for the wide variety of potential buyer questions can help you feel more prepared for the selling process. And having good, thorough, thoughtful answers ready for a buyer can make them feel more confident that your business is the right fit for them!
For even more potential buyer questions, take a look at this article from Forbes: Selling Your Business? How To Answer Nine Questions Buyers Will Likely Ask.