As a Business Broker one of the most irritating things I see buyers do is spend an hour meeting with a seller and walk away knowing very little about the business. How does a buyer spend an hour with a business owner and learn almost nothing about the business?
Many buyers focus on the P&L and financial statements almost exclusively, asking questions about specific expenses, depreciation (which most sellers have no idea about since their CPA calculates this), Cost of Goods Sold, etc. While these questions are appropriate and necessary during Due Diligence, in the early stages of considering a business they provide zero insight into the actual business itself. Consequently when a buyer spends (wastes) their time focusing exclusively on financial questions they walk away with no understanding of the business. Who are the customers, what is the owner’s role and daily activities, what do the employees do, what experience do the employees have, what is the competitive edge the company has, what marketing does the company do? These questions give you insight into the business, it’s products/services, infrastructure, and operations.
When you meet with a business owner/seller ask them open ended questions. Business owners are very proud of their business and most love to talk about it. By asking general questions you start a dialogue where you will learn all about the business and the owner.
The goal of your initial meeting with the Seller is to learn as much as possible about the business and the owner. Is this a business you can see yourself running? How dependent is it on the owner? What’s the owner like? What are the employees like and what is their experience? By asking open ended questions about the business all of this will come out naturally during the discussion and you will gain much more insight into the business than you do from simply asking questions about the P&L.