One of the most basic aspects of an entrepreneur is that he or she tries to make investments. one such investment is around buying startup companies, after all, if you can buy startup which is already functional it almost sounds like you already have your business up and running. However, this facet of buying a startup company is rather complex. Before you actually make an offer to buy the startup, you must ask these 7 questions:
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What Does the Startup do?
The first and foremost question you need to ask is what does the company basically do. It is important you fully understand what is the scope and nature of its business. The reason this question is essential is that you need to align yourself whether the startup does something that interests you. It is an important step before buying a startup.
Is there anything unique about the startup?
Uniqueness in the world of startups is essential. The truth is that if the startup you’re acquiring is not unique it is bound to fail unless it has a really solid portfolio. Try probing them in order to understand the uniqueness or something that sets it apart from other startups.
Related Post: 5 things to consider before joining a startup
What is the Target Market?
All startups have a unique target market. Before you buy a startup, you must put forward the question regarding the target market size and qualities. Identifying the target market is important in terms of statistics as it can give you an idea of how much it can be capitalized.
Who are the startup’s competitors?
This question is a must as competitor knowledge is of utmost importance. The competition in a free market always exist and you must probe the startup owners of who is in the game. Once you have an idea of who the competitors are you will be able to make a decision. In any sort of business model, competition carries a lot of significance as you will be able to see how easy or hard it would be on the gaining edge. Businesses are all about gaining leverage over competitors and this question basically allows you to do that.
Who constitutes the management?
Most startups have management teams that make the project successful. You must ask who the founders are as well as the management team that is running it. The vision, commitment, and dedication are virtues of a hardworking team and you can get an idea through the team members. You should even sit individually with the team to know more about them.
What are the startups marketing strategy?
Marketing strategies are not the same anymore. Several different aspects such as PR advertising, digital advertising, social media advertising, and traditional marketing all work in coherence with each other. When you’re looking to buy the startup, you must have an idea of how marketing is being conducted. Marketing will ultimately define how good your business can flourish.
What is the financial projection of a startup?
The last question is obviously the most important and it can make or break your case to buying the startup firm. The financial projections of a startup basically mean that how much the startup expects to bring in profits. Financial projections are typically for three years and once you get a quote on this then the decision making aspect would become a lot easier.
So, if you’re looking to buy startup then these questions should be prepared beforehand. These questions are essential to be asked because they will decide whether the investment would be fruitful or not.
