Starting any new business is not without its fair share of risks. When buying a bar or nightclub, knowing what key questions to ask before you make a decision can go a long way towards minimising these risks. Of course, all vendors want a quick sale, with the minimum amount of buyer investigation, so it is your responsibility to ensure that you have gleaned as much information as possible before committing to buy.
Make sure that you don't fail to ask him (or her) the following:
* The first (and probably most obvious) question is, why is the business for sale? Although this may seem a bit of a silly question to ask, it's a good place to start, and how it is answered can give you a good insight into the kind of person you are looking to enter into a business transaction with.
* Can you see the accounts? Any reputable seller will be more happy to share these with you. The more open they are, the more you can be sure that what you see is what you get, and that you are not buying into a whole host of hidden problems further on down the line. You need to see full accounts, profits and losses, financial statements, tax returns, balance sheets, check books and cash sales for the past three years. If you are planning on getting a bank loan to fund your business, then all this information will be required before they lend you the money anyway, so it's good to see this all at an early part of the proceedings.
* Ask the owner about any assets the business may have. Assets can be in the form of money in the bank, furniture, fixtures and fittings etc etc. If any of this equipment needs replacing then this is going to cost you money so it's necessary for you to know in advance.
* Does the bar have any recurring business contracts – such as a clubs regular annual meeting, or a companies Christmas party. Recurring contracts and therefore returning, happy customers show that the business has earned profits and has a good reputation.
* One of the very most important things to find out is if the business has any disputes or any court hearings pending. If you buy a bar without checking this, you may well find yourself liable for the previous owner's debts or disputes.