Questions to Ask About a Business
Good questions to ask about a business, whether it is one you are thinking of getting into as a buyer, an investor, a partner or a new hire, or one whose owner you are interviewing for a class. They run from what it sells and how it earns to its customers, its people, its risks, its strategy and its plans, and each has a note on what the answer tells you. Most also work turned inward, as questions to ask to improve your business or to test an idea you have not started on yet.
Want questions from the whole vault instead? Try the random question generator.
The questions
Each question, and why to ask it
Basics
What does the business sell, and who buys it?
Why ask it
Start here even if you think you know. A clear answer fits in two sentences and names a buyer, such as landlords with a handful of rental units or cafes within an hour's drive. If it takes five minutes and the buyer is "everyone", the business has not decided what it is yet.
How does the business make money?
Why ask it
Ask for the mechanics: one-off sales, repeat orders, monthly contracts, commissions, or a mix. A bakery that looks like a shop can turn out to live on wholesale accounts with six restaurants, and that changes who its real customers are. Follow with which stream is growing.
What problem does the business solve for its customers?
Why ask it
Listen for a problem the customer would describe unprompted: a furnace that quits in January, payroll that eats every Friday afternoon. Then ask what those customers did before this business existed. If you are testing an idea of your own, that second answer names your real competition, which is sometimes doing nothing at all.
How did the business start, and what has changed most since then?
Why ask it
The origin story is the easy half, and most owners enjoy telling it. The useful half is the change. A business still selling its first product to its first kind of customer is either very steady or has stopped looking, and your follow-up is which.
Why do customers choose you over the alternatives?
Why ask it
Listen for a reason a customer would give in their own words. "Quality and service" is what every business says. Same-day service calls, or being the only firm in town licensed for a certain job, is a reason you can check by asking a customer.
What is the hardest part of running the business right now?
Why ask it
Whatever comes out first, whether hiring, cash, a difficult landlord or one demanding client, is usually where the owner's week goes. It is a gentler way into the problems than asking what is wrong, which suits a first conversation.
What are you proudest of in this business?
Why ask it
Pride shows what the owner will protect when money gets tight: a client kept for fifteen years, a payroll never missed, a trainee who now runs a crew. It is also the question to reach for when the conversation has started to feel like an audit, since it hands the good part back to them.
If you were starting this business again today, what would you do differently?
Why ask it
This is the advice question in a form that gets a real answer. Asked for advice, an owner offers a slogan, and asked this way they tell a story: the lease signed too early, the partner taken on too fast, the two years of undercharging. A buyer should follow up on whether the mistake has been put right since.
What is the mission of the business, and what work would you turn down because of it?
Why ask it
A mission earns its place when it rules something out: a client the business will not take, a corner it will not cut, a price it will not go below. Ask for the last time that happened. If no example comes, you have heard the sentence from the website, and the staff are the ones to ask what the place really values.
Who owns the business, and who has the final say?
Why ask it
Ownership and control are not always held by the same people. A silent partner, a relative with shares or a lender with a veto can each stop a decision the person in front of you has just agreed to, so ask before you negotiate anything.
How is the business set up legally, and why was that structure chosen?
Why ask it
The names and the consequences differ by country and state (sole proprietorship, partnership, LLC, limited company), so ask how it works where the business is registered. The structure affects who is personally liable and how money can be taken out, and the detail is one for an accountant or lawyer there.
Money
What were revenue and profit last year, and in the two years before that?
Why ask it
Three years shows a direction that one year hides. Notice whether the figures come from memory or need looking up, and whether profit is quoted before or after the owner's own pay, which can change the picture entirely.
What are the biggest costs, and which of them stay the same whatever sales do?
Why ask it
Rent, wages and loan payments arrive in a bad month exactly as they do in a good one. The larger the fixed share, the smaller the dip the business can absorb, so write the list down and add it up before you look at any forecast.
Which product or service makes the most profit, and is it the one that sells the most?
Why ask it
Plenty of owners know their best seller and have never worked out their best earner. The profit can sit in something unglamorous, such as servicing or delivery, while the flagship barely covers its costs. If nobody can give you margin by product, job or customer, treat every profit figure you hear as approximate.
What do you charge, and when did you last raise prices?
Why ask it
The date matters more than the price list. If prices went up last year and the regulars stayed, customers are buying for something other than cost. If nothing has moved in five years while rent and wages have, ask what the owner thinks would happen after an increase, and whether that has ever been tested.
How much does the business need to sell in a month to break even?
Why ask it
Knowing this figure offhand is a sign the business is run by its numbers. If it has to be worked out on the spot, do the sum together: fixed monthly costs divided by what is left from an average sale after its direct costs gives the number of sales needed. Then compare that with a normal month.
What does the busiest week of the year look like, and the slowest month?
Why ask it
A yearly total hides the swing. A garden center or a tax preparer can earn most of its year in one season and still owe rent in all the others, which decides how much cash and how many staff it needs and when. If the swing sounds large, ask for sales by month over the last two years.
How much cash is in the business, and how long could it run without new sales?
Why ask it
Expect a number of weeks or months, which an owner who watches cash will know without looking. A business holding several months of costs can wait out a slow quarter and negotiate calmly. One that is a few weeks from missing payroll makes every decision in a hurry, including the one that involves you.
How quickly do customers pay, and how much is owed to the business today?
Why ask it
Profit on paper and money in the bank part company here. A business that waits two months to be paid while settling its own bills in one needs cash simply to grow, and invoices that have sat unpaid for a long time are often worth less than the figure printed on them.
What do you take out of the business each year, in salary and everything else?
Why ask it
Include the car, the phone, a relative on the payroll and anything else the company pays for. The honest total shows what the business really supports, and a buyer needs it before the profit can be compared with any other business. From a student or a new hire it is prying, so leave it out.
Who keeps the books, and how up to date are they?
Why ask it
Accounts closed every month by a bookkeeper mean the figures you are quoted are probably real. A box of receipts handed over once a year means the owner has been steering by the bank balance, and every other number under Money is softer than it sounds.
Which figures do you look at every week, and what do you do when one drops?
Why ask it
The choice shows what the owner believes drives the business: bookings, cash in the bank, quotes sent, jobs finished. The second half shows whether a falling figure leads to action or is only watched.
Market
Who is your ideal customer, and how many of your current ones fit that description?
Why ask it
Most owners can describe the customer they want. Fewer have counted how many of them they have, and a wide gap means the business earns its living from work it would prefer not to do. Ask what stops them turning the others away.
Who are your five biggest customers, and what share of revenue do they account for?
Why ask it
Add the five shares together while they talk. When one customer is a large slice of sales, the business is only as safe as that relationship, so ask who holds it, whether there is a contract and when it ends. A long, even spread of small customers is duller and much harder to lose.
How much of this year's revenue comes from customers who also bought last year?
Why ask it
Customers who come back are evidence that the product does what it promises. If nearly every sale is to a first-time buyer, the business starts each year from zero. That is normal for a wedding venue or a roofer, so ask what is usual in the trade before you judge.
How do new customers find you, and what does it cost to get one?
Why ask it
A repeatable answer names the source and a figure: two referral partners, a trade show, ads at a known cost per inquiry. "Word of mouth" may well be true, but ask how they know, because a business that cannot say where last month's customers came from cannot plan next month's.
Which customers left in the last year, and why?
Why ask it
Price is the reason most owners reach for first, so go one step further and ask for a departure they think they could have prevented. A buyer can also ask to speak to a former customer, and how that request is received tells you something before any call is made.
What do customers complain about most often?
Why ask it
Complaints repeat, and a good owner can name the top two without thinking: late deliveries, slow replies, a confusing invoice. Ask what changed after the last one. If you are told that customers never complain, ask where a complaint would be written down if one came in.
What do your best customers wish you offered that you do not?
Why ask it
Requests that keep coming up are research nobody had to pay for: a later pickup time, a maintenance plan, an invoice their accounts team can read. Ask how many times one was made before anyone acted on it. Each is a sale the business is sending somewhere else for now.
What do your online reviews say, and who replies to them?
Why ask it
You can read the reviews yourself before the meeting, so this is really a question about attention. An owner who knows the worst one by heart, and answered it, is watching the reputation. For a firm that sells to other firms, ask for two references in place of reviews.
Which competitor worries you, and what do they do better?
Why ask it
An owner who says there is no competition has not looked, or is selling to you. Naming one rival and what it does better shows someone who watches the market, and the thing the rival does better is where money would have to go to catch up.
Is the market you sell into growing, flat or shrinking, and what tells you so?
Why ask it
Ask for the evidence as well as the verdict: inquiries per month, competitors opening or closing, how busy the customers themselves are. A good business in a shrinking market can still be worth having, but it should be priced and planned as one.
Operations
How many people work in the business, and how long has each been here?
Why ask it
Length of service says what a staff survey would. Several people who have stayed for years suggests a decent place to work. A team where nobody lasts long is telling you something about pay, management or both, and it means the business is always retraining.
What do you look for when you hire, and where do you find people?
Why ask it
The first half tells you what the owner believes makes someone good at this work, whether that is a certificate, speed, or turning up on time every day. The second shows whether hiring is planned or done in a scramble the week someone quits. If you are the candidate, you have just heard a description of who does well here.
How do you spend a typical working week, and how much of it is hands-on?
Why ask it
If the week goes on serving customers, the owner has a job. If it goes on hiring, pricing and planning, the business runs under them. Neither is wrong, but the first kind is much harder to hand to anyone else.
Which parts of the business depend on you personally?
Why ask it
Customer relationships, technical know-how and goodwill with suppliers are the usual three, and none of them appears on a balance sheet. Ask what happened the last time the owner took two weeks off. If that has never happened, you have your answer.
Who could the business not do without, and what would happen if they left?
Why ask it
The answer names the two or three people worth meeting before you commit to anything. Ask what keeps each of them here: the pay, a share in the business, or loyalty to the owner personally. The last kind may not carry over to a new owner or a new boss.
Which jobs are written down, and which live only in someone's head?
Why ask it
Ask to see one written procedure, for quoting or opening up or closing the month, whichever they pick. If none exists, the business runs on memory, and whoever holds the memory holds the business. It can be fixed, but someone has to do the writing, and that someone may be you.
What premises, equipment and software does the business rely on, and does it own or rent them?
Why ask it
Get the age of the main equipment and the end date of the lease. Vans near replacement or a lease with a year left are large bills that do not show in last year's profit. Software registered to the owner's personal account is a small problem that grows on the day of a handover.
Who are your suppliers, and how easily could you replace the important ones?
Why ask it
The supplier to worry about is the one with no second choice: the only source of a part, or a distributor whose good terms rest on a friendship with the owner. Ask how long a switch would take and what the business would sell in the meantime.
Could the business handle twice the work with the people and space it has now?
Why ask it
The answer finds the bottleneck. It might be the owner's own hours, one machine, a license that caps numbers, or the size of the kitchen. A growth plan that never mentions the bottleneck has not been costed.
What is broken that you have not had time to fix?
Why ask it
Every business has a list: deferred maintenance, an aging system, a hire that did not work out, a process held together by one spreadsheet. A frank answer is a good sign, and a claim that nothing needs attention is worth putting to the staff as well.
Where does the business lose the most time or money in an ordinary week?
Why ask it
Redone work, quotes that go nowhere, waiting on parts and chasing late payers are the kind of thing to listen for. Ask for a rough figure in hours or in money, even a guess. Turned on your own firm, this is a quick route to an improvement, because stopping a leak needs no new customers.
What would your staff change first if it were up to them?
Why ask it
The people doing the work still see the double handling and the form nobody reads, long after the owner has stopped noticing either. An owner who can answer has asked them. One who cannot has just been handed the next job, and it costs an afternoon.
What one improvement would make the biggest difference this year, and what is stopping it?
Why ask it
The first half is easy, and the second half is the real answer. Whether the obstacle is money, time or one person's attention, you have learned what the business is short of. When the firm is your own, write the obstacle down and put a date beside it.
Risks
What could put this business in serious trouble within a year?
Why ask it
Putting the risk in their own words tells you more than a list you propose. Whether they name a single customer, a platform they depend on, a regulator, or a key employee shows you where they know the weight is resting.
What was the worst year the business has had, and how did it get through?
Why ask it
A bad year that happened is better evidence than a guess about one that might. Listen for what was cut, who was paid late and whether the owner put in their own money, because the same moves are what you would see next time.
What does the business owe, to whom, and on what terms?
Why ask it
Go down the list: bank loans, equipment leases, unpaid tax, supplier balances, money lent by family. Ask whether anyone has signed a personal guarantee, and what the lender would require if ownership changed. For a buyer, debt that comes with the business is part of the price.
What licenses, contracts or approvals does the business depend on, and when do they renew?
Why ask it
Get the renewal dates as well as the names. A liquor license, a franchise agreement or a lease may not pass to a new owner automatically, and the rules differ by place and by contract. Ask how each one works here, and read the transfer clause before relying on it.
Has the business been sued, fined or in a formal dispute, and is anything unresolved?
Why ask it
Ask it plainly and without apology, since any serious buyer or investor would. One old dispute that was settled is ordinary. Open claims, unpaid tax or a regulator's letter belong in front of a lawyer before anyone signs, because how liabilities pass on depends on local law and on how a deal is structured.
What insurance does the business carry, and what would it not cover?
Why ask it
The exclusions matter more than the list of policies. Ask whether it has ever claimed and how that went, and whether a customer contract or a license requires the cover. What counts as enough differs by trade and place, so check with a broker who knows the industry.
Who owns the name, the website and the customer list?
Why ask it
Domains, social accounts and trademarks are often registered to the founder personally, to a former employee or to the agency that built the site. Ask to see whose name is on each. It is dull, quick to check, and awkward to discover after money has changed hands.
How hard would it be for someone to open a rival business, and what would it cost them?
Why ask it
This measures what protects the business: a license that takes years to get, expensive equipment, a location, a reputation. If the honest answer is a van and a website, the business has to keep winning on service. Anyone weighing an idea of their own also comes away with a rough starting budget.
Strategy and plans
What is the strategy for the business, in a sentence or two?
Why ask it
A strategy says where the business competes and why it expects to win there: fixed-price kitchen refits for landlords in one city, say. "Grow sales by a fifth" is a target. If a target is all you hear, ask how, and whatever comes next is the strategy.
Do you compete on price, on speed, on quality or on being the specialist?
Why ask it
The temptation is to claim all four, so ask which one they would give up last. The pick should match what you have already heard about prices and costs. A firm that says quality and charges the lowest rate in town is paying for the difference itself.
What are the top three priorities this year, and what was put aside to make room for them?
Why ask it
A list of ten means nothing has been chosen yet, which is why the question sets a limit. The second half is the test. A priority that displaced nothing was only added to the pile, so ask who is working on it this month.
What change in your industry over the next few years matters most, and what are you doing about it now?
Why ask it
It might be a new rule, a piece of software, a chain moving in or customers who now expect to book online. You are listening for one named change and one thing already under way. "We are keeping an eye on it" means no decision has been made.
When did you last change direction, and what made you do it?
Why ask it
A dropped service, a new kind of customer, a move from retail to wholesale: the story shows how the business reads evidence. Notice whether the change followed the numbers, a customer's remark or a bad quarter. A firm that has held one course for ten years may be right, or may not be checking.
What has to go right for the strategy to work, and which part are you least sure of?
Why ask it
Every plan leans on a few assumptions: that a supplier holds its price, that a second site draws its own customers, that a key hire can be found. An owner who can name the shaky one has thought it through. Ask what they would do if it failed, and how early they would know.
If I asked your staff what the strategy is, what would they say?
Why ask it
A strategy only the owner knows does not shape what anyone does on a Tuesday. A confident answer is easy to test wherever you are allowed to speak to the team. If the owner laughs and says they would have no idea, that is honest, and it is also the first thing to put right.
How will you know a year from now whether the strategy is working?
Why ask it
Ask for a milestone with a date on it, such as forty contract customers by spring or the second van paying for itself by December. A measure chosen in advance is hard to argue with afterwards. Without one, any result can be described as progress.
What do you want this business to look like five years from now?
Why ask it
A staple, and worth asking for what it shows about appetite. Some owners want three more locations and some want the same sales with Fridays off. Both are legitimate, and you need to know which you are dealing with before your plans meet theirs.
Where will growth come from: more customers, more from each customer, or something new to sell?
Why ask it
Forcing a choice among the three stops the answer drifting into all of them at once. Whichever they pick, ask what has already been done toward it, because a plan with its first step taken is a different thing from an intention.
If you had a year's profit to reinvest tomorrow, where would it go?
Why ask it
The first thing named is the constraint the owner feels most: a second van, a salesperson, a website that takes orders. Hesitation is informative too. It can mean the business has no obvious next move, or that nobody has had time to think about one.
What have you tried that did not work?
Why ask it
A second location that closed, a product nobody bought, an ad campaign that brought the wrong customers: each one marks a place where the business has already tested its limits. Ask what it cost and what they concluded. No failures at all suggests nothing new has been attempted for a while.
How do you expect to leave the business one day?
Why ask it
The options are few: sell, pass it to family, hand it to a manager, or close the doors. Whichever it is sets the horizon for anyone joining or investing. An owner who has never thought about it has told you something as well.
Why are you selling, or why do you want a partner now?
Why ask it
Retirement, health, a move and plain tiredness are all ordinary reasons, and each can be checked against something: the lease, the last three years of sales, how the owner talks about next year. A business described as thriving and for sale in a hurry deserves the question a second time, later on.
What should I have asked about the business that I have not?
Why ask it
Save it for last. Owners know where the soft spots are, and some will point to one when handed the opening, if only to get it said. "No, I think you covered it" is a fair answer after an hour and a thin one after ten minutes.
Looking at a Business Properly
Practical guidance for the conversation itself
Which groups fit your situation
A first conversation or a school project
Stay with Basics, and from Market take the questions about customers, reviews and competitors. Strategy and plans opens with the initial questions to ask a business about strategy (what it is, how the firm competes, what comes first this year) and closes with where the owner wants to take it, and both ends suit a first meeting. Owners talk freely about how they started, who they serve and where they are heading, and none of it needs a document. Leave profit, debt and disputes alone unless they are offered: nobody owes those figures to a student or a stranger.
A job, a partnership or an investment
Add Money, Operations and the rest of Strategy and plans. It is fair to ask whether the business can pay you, how much of it rests on one person and who really decides. Ask for less detail than a buyer would, and notice what is shared willingly.
Buying the business
Every group applies, and Money and Risks need paper behind each answer. Expect to be asked for a confidentiality agreement before detailed figures appear, and take the legal, tax and valuation questions to advisers who work where the business is registered.
Improving your own business, or testing an idea
Answer the list in writing as if a stranger had asked. For a business that is trading, the questions you cannot answer from memory are the ones to work on, and the last three under Operations go straight at improvement: where the week leaks, what the staff would change and what stands in the way. For an idea there is no history yet, so swap it for evidence: the problem it solves, who has said they would pay, what they use today, and what it would cost you or a rival to open.
When money is going in, verify
Match every claim to a document
Revenue should tie to bank statements and tax filings, customer concentration to invoices, staff costs to payroll records. An owner who resists showing the underlying records is telling you something about the records.
Talk to people who are not the owner
Two customers, two staff members and one supplier will describe a different business from the one in the pitch. Ask permission first where the sale is confidential, but treat a blanket refusal as a finding and not only an obstacle.
Ask the same question twice, weeks apart
Figures that move between the first conversation and the third, with no explanation, were probably estimates the first time. Repeating a question costs nothing, and the second answer is the one to check against the records.
Work out what you are actually buying
Separate the assets, the contracts, the staff and the owner's personal relationships. Whatever leaves with the owner is not part of what you are paying for, so list it before you talk about price.
The order that works
- Start with what the business sells and how the money is made, before anything about mission or vision.
- If you are a buyer or investor, ask about the biggest customers and the cash early, since either can end your interest quickly.
- Leave the questions about the owner's dependence and reasons for selling until some trust exists.
- Save your hardest question for a second meeting, when the rehearsed answers have run out.
- End on the last question in the list: what you should have asked and did not.
Common pitfalls
Falling for the growth story
Projections are free to produce and cost nothing to miss. Judge the business on what it has already done for three years and on the quality of its existing customers, then treat any forecast as an argument to be tested.
Ignoring the owner's own pay
A business can look profitable because the owner pays themselves nothing, or unprofitable because they pay themselves generously and run costs through the company. Adjust the profit for what a hired manager would cost before comparing it with anything.
Skipping the boring documents
Leases, supplier contracts, insurance policies and employment agreements are where the obligations are written down. They are dull to read, and they are what you will be held to after the handshake.
Asking a student's questions like a buyer, or the reverse
An owner giving twenty minutes to a class project should not be asked for the profit figures, and a buyer who only asks about the founding story has learned nothing to act on. Pick the groups that match why you are there and say so at the start.