Business

These checklist questions form the backbone of your due diligence process. They help you to understand the company itself. From operations to customer focus to the long-term viability. 

They compel investors to examine the competitive landscape. Ensuring you understand industry challenges and the company's unique advantages. Helping you uncover the business's true potential and any potential red flags. Leading to more informed investment decisions.

Understanding the Business—The Basics

• Do I want to spend a lot of time learning about this business?

• How would you evaluate this business if you were to become its CEO?

• Can you describe how the business operates, in your own words?

• How does the business make money?

• How has the business evolved over time?

• In what foreign markets does the business operate, and what are the risks of operating in these countries?

Understanding the Business—from the Customer Perspective

• Who is the core customer of the business?

• Is the customer base concentrated or diversified?

• Is it easy or difficult to convince customers to buy the products or services?

• What is the customer retention rate for the business?

• What are the signs a business is customer oriented?

• What pain does the business alleviate for the customer?

• To what degree is the customer dependent on the products or services from the business?

• If the business disappeared tomorrow, what impact would this have on the customer base?

Evaluating the Strengths and Weaknesses of a Business and Industry

• Does the business have a sustainable competitive advantage and what is its source?

• Does the business possess the ability to raise prices without losing customers?

• Does the business operate in a good or bad industry?

• How has the industry evolved over time?

• What is the competitive landscape, and how intense is the competition?

• What type of relationship does the business have with its suppliers?

If you want to download the full investment checklist, click here.