Four Vital Questions Before Opening a Business
1. Do I understand the business?
To really “understand the business” you must know exactly how the business makes its money and exactly where the business spends its money. That’s the only way you’ll ever be able to properly analyze the company’s Profit and Loss statement.2. Am I comfortable with management?
Many of you wrote about trust in management as one of the key questions you should look at. You were spot on with that assertion. But how can you tell if the person pitching you the idea is trustworthy? That’s an art in and of itself, and we’ll dive deeper into that in coming weeks also.3. What is the business worth?
Many of the companies you’ll be asked to invest in are start-ups (very high risk). Some of the companies you may seek investment opportunities in may be existing businesses (like Joe’s Pizza Parlor). Either way, you want to make sure that once you get to this part of the negotiation you’ll have a good handle on what the business is worth.4. What do I have to pay?
Many people will argue that they invested in XYZ Company because, in their words, it was a “good company”. But to invest at the highest level of the game, you have to be able to differentiate between a good company and a good price.Image via propublishingservices
Tom Lindstrom on April 6th, 2008 2:16 am
Good points! I think having the right mindset is also very important.You need to be sure what you are getting into by starting your own business.
AJC @ 7million7years on April 6th, 2008 8:01 am
These are NOT the 4 questions that I recommend! This is just the original list (taken from Tycoon Report) that I was DISPUTING … the correct questions are here:
http://7million7years.com/2008/03/25/the-4-absolutely-vital-questions-to-ask-before-buying-any-business/
Thanks! AJC.
agung on April 6th, 2008 12:38 pm
Good jobs…grow your bussines exactly.
etavitom on April 7th, 2008 7:50 am
great suggestions.. thanks!
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