33 Questions To Ask Yourself Before Investing In A Business

Thinking about investing in a Starting, Selling, or Investing in a Business? It can be a big decision, so make sure you do your due diligence. Sometimes, being human, we can forget to ask the right questions. We have compiled a list of 33 Questions To Ask Yourself Before Investing In A Business questions for you to ask.

Questions To Ask Yourself Before Investing In A Business questions

• How does this investment fit with your overall investment plan?
• What is your investment time frame?
• What are your goals with this investment?
• How often will you be making financial contributions, and how much?
• How often will you be contributing your time, and how much?
• How often will you be contributing other resources, and how much?
• What is your motivation behind the investment?
• What kind of risks are you willing to take in the quest for returns?
• Do you have an overall plan for your asset allocation and does this investment fit into this plan?
• Do you fully understand how this business works?
• What are you looking to gain from investing in this business?
• Will the seller still have a stake in the business?
• Are your partner and family supportive of your decision to invest in this business?
• Is investing in this business the best decision for your situation right now?
• How will you make sure that there are no skeletons in the closet?
• How easily can you get out of this investment if you change your mind?
• Will this investment jeopardize some of your other investments or assets?
• Are there any special taxation issues you need to be aware of, consider or address?
• Do you have a clearly defined exit strategy?
• How much working capital will you have available?
• How realistic is it for you to grow the business and sell it for a profit?
• Will you hire third-party help (solicitors, accountants, etc.) to help you with the process?
• Are you funding the investment by taking up a loan? If yes:
• Where will the funding come from?
• Have you already been pre-approved?
• What are the terms and the interest rate of the loan?
• Could the terms change over time, or are elements such as the interest rate locked in?
• Can the loan giver order you to pay back the loan at short notice?
• What will happen if you default on one or more payments?
• Are you going to take an active part in running the business you are investing in? (If so, we suggest having a close look at "Questions to ask yourself before starting a business")
• What is the worst-case scenario?
• What would be a realistic best-case scenario for investing in this business?
• What does your gut tell you about the business? Do you trust the key people within the business?

If you are looking for more due diligence questions for your Starting, Selling or Investing in a Business investment recommend you take a look at 660 questions to ask before starting , selling or investing in a business.