The typical questions to ask when buying a business are pretty obvious and necessary, but asking those questions alone won’t tell you the real story.
For example, if you ask the buyer ‘why are you selling your business?’, they will most likely give you a canned, rehearsed answer only designed not to scare you away so you will buy their business. But is this answer really going to help you?
Instead of going thru a business buying due diligence checklist, why not enter the negotiation with the goal of gathering intelligence instead?
What is Gathering Intelligence?
Simply put, gathering intelligence is like a rapport-building exercise where you’re getting to know and understand the buyer more so you can best understand their situation, predicaments, and true motivations for selling. But unlike rapport building, where you’re looking for commonality, when gathering intelligence, you’re looking to get them to answer the tough questions that they won’t directly come out and answer. Once understood, you can then provide the best solution for both parties.
I believe that gathering intelligence is a crucial part of the sales process that, when done right, will save you a lot of time because you will have enough information to qualify the seller/business early on.
This information will help you determine whether the business opportunity is worth pursuing or not.
Why Ask ‘Out of the Box Questions’?
Through the intelligence-gathering process, you will ask questions that are a bit awkward and that buyers may not want to answer. Because of this, they may give you short answers, and for this, you will need to learn how to pivot and ask this same question a different way until you get the answer you’re looking for.
But they will ultimately answer because when you are dealing with a serious buyer, they will be vulnerable and honest because they are hoping you are their buyer, thus earning you instant rapport. With this advantage in mind, be bold and ask the hard questions, and remember: the only stupid questions are the ones you don’t ask.
My 7 ‘Out of the Box’ Questions I Always Ask When Buying A Business:
- How many days do you work? What time do you get to work? What time do you get home?
- How many children do you have? How old are they? What do they do? Do you have grandkids?
- What does your spouse do?
- What do you and your spouse enjoy doing in your free time?
- How many vacations do you take a year?
- What do you do in your free time?
- What was your childhood like?
I don’t ask these sequentially – based on their response to one, I ask the appropriate follow-up questions until I’m satisfied with the answer. Then I move on. By the end of my initial meeting, I will have asked and collected information on all 7 of the above questions which, in case you may not have noticed, had NOTHING to do with their business!
It’s crucial for you to really dissect these questions and think about their possible answers, and the breakthroughs they may lead to.
Consider some of the following responses you may hear…
- “My marriage is on the rocks…”
- “My spouse wants to move…”
- “I am never home…”
- “I don’t have time for hobbies.”
- “I haven’t gone on a vacation in 3 years.”
- “We want to buy a new house.”
- “My parents are older, and I want to spend more time with them.”
- “I would love to spend time hunting, fishing, etc.”
- “I don’t really care, I really love what I do.”
And think about the information your obtaining – and how this information can assist you with the business acquisition.
Doing your due diligence by using ‘outside the box’ questions to gather information before buying a company will earn you bargaining power and help you avoid unforeseen problems.
Have any other outside the box questions you ask prior to buying a business? Leave your comments below -we’d love to hear them!