You’ve found a business that looks promising.
You’ve had the chats, peeked at the P&L, maybe even tasted the product.
Now you’re thinking: This could actually work.
This is where you stop dreaming and start digging.
Welcome to Phase 2: The Full Monty.
YOU’RE NOT JUST BUYING A BUSINESS. YOU’RE BUYING ITS PROBLEMS TOO.
Don’t get starry-eyed.
That café’s avocado toast won’t pay your mortgage if the books are cooked and the staff are ghosts.
This is the part where you put your grown-up pants on and ask the hard stuff.
WHAT TO LOOK AT (AND WHY MOST PEOPLE DON’T)
If Phase 1 was about what the seller told you, Phase 2 is about what the numbers and documents confirm.
You're going deeper than tax returns now. This is the full diagnostic.
Here’s what’s on the menu:
- Contracts and leases (especially rent — it’ll be your biggest fixed cost)
- Employee records and wage obligations (super, awards, leave accruals — all of it)
- Customer concentration (is this just one big account in disguise?)
- Supplier deals (any handshake agreements? Write. Them. Down.)
- Business structure and company debt
- Competitor landscape (and how they’re quietly gutting your margins)
- Cash handling and systems (is this thing running on spreadsheets and prayer?)
And most importantly: What’s the break-even point?
If you’re putting down $350k, how long until you make it back?
12 months? 18? Or are you hoping Christmas and UberEats save you?
THIS IS WHERE BUYERS FREAK OUT
You’ll feel overwhelmed. That’s normal.
You’ll think, “I don’t even know what bylaws are.” That’s also normal.
Relax. You don’t need a law degree to do due diligence.
But you do need a system.
Get a good accountant. A switched-on lawyer.
A mate who’s been through it.
Or join a community that’s done this before.
Accountability beats anxiety — every time.
CUSTOMISE YOUR CHECKLIST. ONE SIZE DOESN’T FIT JACK.
Every deal is different. So treat it like one.
Buying a laundromat?
Count coins. Two days a week. For a month. Yes, literally.
Check the power bills.
Ask if the machines are under service contract and with whom.
No contract? That’s your 2am flood waiting to happen.
Buying a café?
Ask when the espresso machine was last serviced.
Check the POS system for voids and discounts.
Open the fridge and see what’s expired. Yes, seriously.
Buying anything with a lease?
Compare it to the neighbours.
If you’re paying double for the same square footage, guess who’s getting played?
RED FLAGS THAT SCREAM “RUN”
CASHFLOW DISCREPANCIES
Seller says they make $180k, but the tax return says $40k.
“Oh we do a lot of cash,” they say.
Translation? You’re buying a lie — and the ATO will come knocking.
CONSISTENTLY BAD GOOGLE REVIEWS
You can’t fix a bad reputation overnight.
Use it as leverage — or walk if the brand’s too cooked.
MISSING LICENCES
Seller says “Never needed one.”
But the council says you do.
No licence = no deal. End of story.
THIS IS THE WORK THAT MAKES YOU RICH (OR SAVES YOU FROM BEING BROKE)
Look, it’s tempting to get caught up in the excitement.
But this isn’t a new couch. You’re buying a future.
Ask the tough questions now — or answer to your regrets later.
If the seller gets defensive when you start asking for documents?
That’s the answer.
If everything checks out and the numbers hold?
Now you’re cooking with gas.
OWNERSHIP ISN’T A HOLIDAY. IT’S A TEST.
Phase 2 is where most wannabe buyers tap out.
But if you stay sharp, keep your wits, and trust the process?
You’ll not only survive this phase,
You’ll set yourself up to win the whole damn thing.
Your Next Step
Ready to find businesses that will pass your due diligence tests with flying colours?
Explore our current listings of Australian businesses for sale at BusinessForSale.com.au