"A Business that I can Understand"

If you are in the business of buying businesses, you will know that legendary investor Warren Buffett's most stringent criterion is that he has to understand the businesses that he buys.

"I look for businesses that I can understand."

Like his other statements, this one is simple and yet offers sofistication. As far as I read, there hasn't been an explanation on this statement. I guess the main reason is that no big words were used and people would appear silly if he asked. However, after I read this statement for the 359th times, it ponders upon me. Exactly what he wants to understand about the business? What elements are difficult to understand even for a guru like him?

My thought process aloud...

1. How is the business going to get its revenue and profit?
2. What is the cost structure?
3. Are there cost factors that cannot be controlled? e.g. labor, raw material, rental, regulatory expenses, R&D
4. Can these costs be passed on to the customers?
5. Can the business raise its price to raise overall revenue and profitability?
6. Are there regulations on pricing?
7. Is there intense competition that squeezes the margin?
8. If there is no competition, why? e.g. Is it worth for an incumbant to compete in the market?
9. How much capital does the business need to double its profitability. i.e. Can the business employ a greater amount of capital at the present rate of return.
10. How can the revenue/profitability disappear? i.e. MARGIN OF SAFETY
11. Can I be sure that the product or service that is provided by this business will continue to be desirable in 10 years time?
12. Does the business need to constantly innovate itself to stay in business? or can it simply do the same thing over and over again to strengthen its position?