There are several reasons why investors buy an existing business. Once you have found that bookkeeping practice for sale, for instance, and the agreement has been made with the company’s previous owner, it’s time to roll up your sleeves and get to work. Just because buying an existing business is less of a risk in comparison to starting a business from scratch, doesn’t mean the company will succeed.
Before investing in an already established business, make sure that you employ some professionals to help your through the process such as a certified appraiser so that you can understand the true value of the business, and a reputable broker, like this Business Broker Queensland (QLD) | Sales and Acquisitions. An experienced broker will help you through the entire process, including the negotiating phase, which can prove extremely challenging, especially if this is your first time buying an existing business.
Organize a Meeting With The Staff Members
If you purchase a business that already has existing staff members, the first thing you will want to do is speak with them about how the business is currently running. You might not have been able to speak with the employees until the sale has been agreed upon, but now that you have officially taken over, organize a meeting with them.
If you don’t have intimate knowledge of the way the business runs, or you are unfamiliar with the industry, your new staff members might be able to provide you with vital information. They should be able to take you through what they do on a day-to-day basis. Understanding how each department operates will help give you an insight into how the business is currently running.
Some employees might be worried about the takeover, so you might need to convince some of the staff members to stay working for you. Just because they were loyal to their previous employer, doesn’t mean they will want to work for you. Some might think that they are in danger of losing their job because of the recent sale, so it’s best if you let everybody know whether or not their position in the company is safe. Your new employees might have a lot of questions, so don’t forget to listen to what they have to say, and answer each question to the best of your ability.
The business’s clients might like dealing with your current employees, so if they are unable to retain quality workers, your business might suffer. Consider making direct contact with your current clients, and with old clients to see if they will come back and deal with the business now that you have taken over.
Transition
The transition phase is one of the most important parts of the process, especially if you are new to the industry. If the owner is willing to stay on as an advisor, whether he or she will be working temporarily or for the long haul, watching them work will help you understand what to do. You will be able to ask them simple and complicated questions you might have in mind. This should be discussed during the negotiation stage, and if the owner agrees to stay on, it will help you get off to a good start.
If the owner is reluctant to stay on, you might come across some issues down the line. They might be ill or want to retire, but if there isn’t any clear reason why they are selling the company, and they refuse to help you during the transition stage, they might be hiding something. Some sellers will want to take the money, and shortly after starting a similar business with the profit they made from the sale.
Set Targets
Setting realistic targets after you have taken over an existing company might not be easy, but it is important because it will help you focus on the direction you want to take the business. Once you have figured out what needs to be done, come up with a monthly goal. During the first few months, you should be able to make all the changes to the business, including redecorating your office, updating out-of-date equipment, retaining current staff members, hiring new employees, and getting rid of staff members you no longer want to employ. Once you have completed all of this and you get used to running the business, it’s time to come up with an official business plan. Keep in mind that you might have a large amount of paperwork to go through especially during the early stages of the takeover.
Setting accurate targets during the first few months can be difficult, but you should be able to come up with a rough timeline. Having a rough outline of what needs to be done will help you and your new staff members stay motivated and on course for making the business successful.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin