when buying a business, what are the best questions to ask first before you buy? like things about inventory, finances, and leases maybe?

There are many things you need to ask, but for an individual buying a business, in most cases I would say the most important single question is "What is the cash flow of the business?" In other words, how much is left over after paying expenses? "Cash flow" goes by various names (profit, income, EBITDA, and more) and is is really only a starting point. Before you buy any business you need to fully understand all of the components of revenue (income) including an understanding not only of the existing revenues but also what the future prospects look like (market share, industry trends, etc...). You also need to understand ALL of the expenses, including what the owner takes out in various forms.

After determining cash flow, the next step is understanding the assets (inventory, accounts receivable, intellectual property, etc...) and liabilities. Again, you need to understand EVERYTHING.

A good business lawyer, a knowledgeable accountant, and an understanding banker are essential in most business purchases to make sure that you are getting what you think you are getting.

Good luck!

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Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

Most important think to ask yourself, is that what will you gain from that business after buying it?

Best business to buy are the one running in loss, which you can turn into profit.

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