Four Questions to Ask Yourself Before Purchasing a Business

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 705 words

Before you buy a business, ask yourself four questions: will I enjoy this work, do I have a credible plan for it, do I understand its financials, and am I ready for the risks the numbers do not show? A yes to all four does not guarantee success, but a no to any of them is a reason to slow down. These questions are about you as much as the company, and they are best answered before you sign a letter of intent, not after.

1. Will I enjoy the work, and the hours?

Owner-operators work long hours, especially in the first year while they learn the business and earn the trust of staff and customers. If you dislike the work itself, those hours wear you down fast, and a tired, disengaged owner makes worse decisions. Ask to spend time with the seller on an ordinary day, and think honestly about the tasks you would do most often: selling, scheduling, handling complaints, managing people. You will live with this choice for years, and the business will feel it if you regret it.

2. Do I have a plan, and does the seller's make sense?

Ask the seller for whatever plans, budgets or goals the company has used, and compare them with what actually happened. A plan missed repeatedly without explanation, or no plan at all, tells you how the business has been run.

Then write your own: what you will keep, what you will change in the first year, how you will service the debt, and what happens if revenue dips. If your plan only works when everything goes right, the price or the structure is wrong. Lenders will ask for this plan anyway, so it is effort you would spend regardless.

Be wary of plans built on changing everything at once. Staff and customers are watching a new owner closely in the first months, and sweeping changes before you understand why things are done the way they are can cost you the people and accounts you paid for.

3. Do I understand the financials, and who is helping me?

You should be able to explain in your own words how the company makes money, where its costs sit and what it truly earns after a fair salary for you. That means reviewing several years of tax returns, profit and loss statements and balance sheets, and checking that they agree. Few first-time buyers can do this alone, so assemble a team early.

• An accountant who works for you, to test the earnings, add-backs and working capital
• A transaction attorney, to review contracts, leases, liabilities and the purchase agreement
• A lender that finances acquisitions of this size, to tell you what the deal can support
• An insurance adviser, to find coverage gaps before they become your gaps

4. Am I ready for what the numbers do not show?

A company can have a sensible plan and clean financials and still face a hard future. Look past the statements at how exposed the business is to competitors, to shifts in its market and to the loss of key managers or employees. Check how strong its relationships with major customers and suppliers are, and whether they belong to the company or to the seller personally. Ask directly about pending or threatened lawsuits, regulatory issues and warranty claims.

The purchase agreement will contain the seller's representations and warranties, formal statements about the company that the seller stands behind. Our answer on representations and warranties explains how they work from the seller's side, which shows you what protection to ask for.

Finally, ask whether you can carry the downside. If the company had a bad year right after you bought it, could you still meet the loan payments and your household costs?

Where MDR & Associates fits for buyers

MDR & Associates represents sellers, and it prepares each company for buyers who ask exactly these questions: a financial recast, a confidential marketing package and a professionally produced video that shows the operation. Buyers register, sign an NDA and complete a financial profile before seeing details, and the firm can help arrange SBA, conventional and seller-financed structures. When you are ready to look at real companies, start on the buyer page.

Where this fitsBuy a business in Texas →

Questions owners ask next

Should I spend time with the owner before making an offer?

A short visit before an offer is common, arranged discreetly so staff are not alarmed. Longer time working alongside the owner usually comes during due diligence or as part of the transition after closing. Either way, spend enough time to see what the owner's job really involves day to day.

What if my spouse is not comfortable with the risk?

Take it seriously. Personal guarantees, long hours and a possible dip in income in the first year affect the whole household. Walk through the downside case together, with your accountant if needed, before you sign a letter of intent rather than after it.