What to look for when buying a business is answered by most guides with a tour: meet the staff, watch the customers, feel the place. The tour is worth taking and proves nothing. What decides the purchase is six things that live in documents, and the buyer who asks for the documents can date each answer and show it to a lender. This page names the six, the document each lives in, and where the free sheets on this site use the figures they contain.
Earnings, and whether they are declared
Seller's discretionary earnings rebuilt from three years of tax returns, not from the seller's spreadsheet. On the calculator's example that figure is $180,000, and everything downstream, the payments the business can carry and the price the buyer can offer, rests on it. A business whose earnings exist only outside the returns is being sold on income the buyer cannot borrow against.
Customers, premises and people
Sales by customer shows whether the revenue has one owner or many; the lease shows whether the business can stay where it earns; the staff list with pay and tenure shows who will still be there after the seller leaves. Each is a document on the diligence list, and on the checklist sheet's example each is one of 24 items chased over 60 days.
Assets, liabilities and the seller's reason
The equipment list with ages tells the buyer what they will replace and when; the accounts payable, contracts and disputes tell them what they inherit; and the seller's reason for selling, in writing, tells them what the seller thinks the buyer has not noticed. The price is then allocated across those assets for the statement both sides file, and the split is agreed before closing.
Questions people ask about what to look for when buying a business
Should I still take the tour?
Yes. It tells you whether you want the business. The documents tell you whether you should buy it.
What if the seller resists a document request?
Record the request and the response with their dates. Resistance is information, and the register in Pro is where the record lives.
How does this connect to the calculator?
The earnings the returns prove are the input the calculator tests the notes against, so the diligence list and the funding stack are one file.