What not to do after buying a business

A colleague of mine was recounting a recent transaction where the business began to decline shortly after the buyer took over. It’s something she and I have seen far too many times over the years in owner-operated businesses.

Why does this happen? How can a new owner prevent it? I’m not referring to struggling businesses that are already in decline before a sale. Or instances where a new owner is simply over their head in terms of experience.

I’m talking about good, profitable businesses that are being sold to seemingly capable buyers who are quickly looking south.

Big Mistake #1 – Thinking You Know What You’re Doing

Unless a business buyer has extensive experience in the industry of the business they are acquiring, the reality is that they know absolutely nothing yet about how to operate it successfully. A buyer takes over a business and the role of someone (the seller) who has been completely immersed in the business. They may not have been a big landlord. They may not have built the business where a new owner thinks it can grow. They may not be wise in many ways. But one thing they’ve done is they’ve got the guts of the business in their guts.

A new owner arrives and on the first day he doesn’t even know how to turn off the alarm. To think that they can suddenly implement new ideas and strategies is madness. Before anything is implemented in any way, learn the trade. Do not seek to have an immediate impact; it will come with time. Adopt the mindset of being a model – an “I don’t know anything” approach is great. Park your ego. Listen. Learn. once you understand how things work and what doesn’t, then, and only then, can you start making your mark on the business.

Big mistake #2 – Confusing problems with improvements

As a subset of number one, until a new owner has a real “feel” for the business, it is impossible to identify potential improvements with strong certainty. Don’t confuse problems with improvements. Problems should be resolved efficiently and usually quickly. potential improvements should be assessed. What a new owner thinks is a great idea, may not be so wonderful.

A home service business was sold and the business had been in existence for over 20 years. They had an excellent reputation with their clientele who frequently commented on the personalized service provided by the technicians. They went out, assessed the problem, presented options, and won many cases. Interestingly enough, the technicians used what many believe to be antiquated methods. They wrote it all down and then called the customers with the quote. In fact, it was a significant attraction for customers. They felt that the service was personally tailored to them. The new owner decided a week after taking office to convert all work to tablets. Sounds good, right? The problem was that the technicians in the field were completely pissed off. The transition was not smooth, employees were frustrated, customers were surprised and they both started to leave. While a conversion to tablets might have been a good idea, it certainly wasn’t prudent so soon after a takeover. The new owner should have studied it more thoroughly, consulted with the team, ensured proper training was in the palace, and slowly rolled it out to a testing environment.

If there are problems in the business early on, solve them. These are usually more pressing items, as opposed to improvements that are important but need to be evaluated.

Big Mistake #3 – Forgetting the Two Most Valuable Assets

The two most important assets of a business are its customers and its employees. When a business is sold, employees worry about their jobs and customers worry about the product or service they are buying. The easiest way to put the two at ease is to let them know that you are not planning any changes until you, the new owner, truly understand the business and rely on their feedback to guide you. .

Employees need to have confidence in their work and customers need to see the whole transition as seamless. Similar to maintaining the status quo until you learn the trade, make the transition smooth or unrecognizable.

Communicate with them often. Keep them up to date. Include them in your thinking. Get their feedback.

Big mistake #4 – When to forget rules 1, 2 and 3

Unfortunately, after a business sale, there can be collateral damage. This usually happens among staff. I always advise buyers to form their own opinion of employees, even if the seller wants to share their views with you. Give everyone a chance to prove themselves and be reasonable. At the same time, understand that some employees can’t handle a transition, or they create friction, or they just don’t get along well with the owner. Either way, if one of the employees isn’t a good fit for you or the company, do yourself both a favor and let them go. Do it quickly and respectfully.

Big Mistake #5 – Returning the Seller

It’s always amazing to me when a buyer tells me that he told the seller he didn’t need any more training after a few weeks. My answer is always the same: “You must be a genius to have learned everything in 14 days?

Whatever training and transition period you negotiate, use it well. Follow the seller everywhere like a puppy. To ask questions. The goal is to learn what they do on a daily basis. You may not be doing the same things, or you may not be doing them the same way, but learn what they do so you know what to do. You may not agree with them, but keep in mind that they played the role that you will soon take over. Choose their brain. Take advantage of their knowledge and experience.

Hurry up and slow down

As a new owner, it is normal and encouraged to be impatient and enthusiastic. You want staff to be on board and customers to be comfortable. The only goal you should be working towards is to learn the trade as best you can as quickly as possible. Until you have a real “feel” for the company, you aren’t capable of making big decisions, so don’t fool yourself. Come in. Be smart. Grow.

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