Top 5 Things to Look at When Purchasing a Business
- johnry8
- Nov 28
- 2 min read
Buying a business can be a smart way to step into ownership with customers, systems and income already in place. But before you agree to anything, it’s essential to carry out proper checks so you know exactly what you’re buying. This guide covers the top five things to review during your due diligence, especially for those looking at small businesses in Australia.
1. Review the Financials Thoroughly
The financial history tells you whether the business is healthy and sustainable. Key areas to examine include:
Profit and loss statements for at least the past three years
Cash flow trends
Balance sheet
Any existing loans or unpaid liabilities
ATO obligations, including BAS, PAYG, super and any payment plans
Whether revenue has been stable or declining
2. Understand How the Business Makes Its Money
Not all income streams are equal. You need to know:
Who the customers are
Whether income relies heavily on a small number of clients
How long customers usually stay
Whether contracts are ongoing or once off
Seasonal factors
How leads are generated
3. Check All Contracts and Legal Obligations
Contracts can affect both the cost and future performance of the business. Key items to review include:
Customer agreements
Supplier contracts and pricing
Employee awards, leave balances and any entitlements
Franchise agreements (if relevant)
Software subscriptions
Lease terms, rent increases and outgoings
4. Assess the Systems and Day to Day Operations
A business with organised systems is far simpler to take over. Look at:
How work is scheduled and delivered
Whether there are manuals or process notes
How staff are trained
Which software is used for sales, accounting or workflow management
How easily tasks can be delegated
5. Be Honest About the Role You’ll Be Taking On
Before buying, consider whether the business suits your skills, income goals and lifestyle. Ask yourself:
What will your weekly workload look like?
Do you have the expertise to run the business effectively?
Will you need to hire additional staff?
Is the business structured for growth or just maintenance?
Extra Checks Worth Adding to Your Due Diligence
To strengthen your assessment, consider also reviewing:
Customer feedback and online reviews
Supplier relationships and pricing pressure
Competitor activity
Regulatory licences or industry requirements
The seller’s reason for exiting
These points are often missed but can significantly influence long term performance.
Thinking About Buying a Business? Have a chat with Rise Accountants to make sure you’re doing your due diligence.