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By Richard Parker, President of The
Business For Sale Buyer Resource Center™ and author
of the most widely used reference resource and strategy
guide for buying a business for sale - How To Buy A Good Business At A Great
Price©
It's One Thing to Buy A Business, Now You Have To
Run It!
The first 90 days after you close on a business
purchase will prove to be the most critical time in you
new venture's short-term future. There are several
key factors that if done right, will set the foundation
for your success. It is very important for you to lay out
your plan for post-closing before you take over so as to
ensure the smoothest transition possible.
Don't Change Anything…. Yet!
Unless you have an intimate knowledge of the business
and the industry, much, if not everything will be new to
you. While it is normal for you to jump in full-steam
ahead and implement many changes that you've thought
about, the best thing that you can do is nothing, at
least at the very beginning.. That's right, no major
changes at all, at least for now. Most businesses
experience a downturn in the first three to six months
after a new owner takes over. Don't panic, it can
happen. However, if you avoid any substantial changes,
things should rollover effectively.
Since so much is new, it would be impossible for you
to set forth any policies or procedures that make sense.
What you want to do is to first learn the business: who
are the customers, what do they want and expect,
understand the employees and determine their role and
contribution to the business. Avoid drastic changes. The
old saying that you've got to learn before you can
earn is most applicable in this situation.
Get in, get comfortable, get smart and then get
going.
A good friend of mine has a great line:
"you've got to know it before you can grow
it".
The Seller's Role
Typically, there will be a period immediately after
the acquisition where the former owner will be around for
a transition period. This varies from deal to deal. In
some cases, it can be as short as a couple of weeks while
others may involve a long-term training period and even
an ongoing consultation/employment relationship. This can
be a difficult time. Regardless of the length of the
relationship, keep in mind that the seller will still
have a very strong attachment to the business and the
employees will take some time getting used to a new
boss.
Interestingly enough, no seller has ever made it
through the entire training period for any business
I've acquired. Sure, they have a role to offer some
insights, but I've always found them to be more of a
hindrance than an asset. Of course, if it's a
complicated business, then this may not always hold true.
If the business is far too difficult for you to take
over, or, if it relies on them completely to succeed, you
probably shouldn't buy it.
Pick their brains as best you can. Always keep the
relationship friendly; you never know when you'll
need them and they can remain a good source for
brainstorming down the road. However, this is now your
business, you're the new boss, it's your show,
and it's time to get the show on the road.
Prepare a comprehensive list of everything that you
want them to cover during training. This includes
everything from how to operate the alarm systems down to
providing you with their evaluation of the employees. One
subject that should be covered at length is to ask them
what they would do in your situation. Ask them to outline
what their business plan would like and what things they
feel you should explore as the new owner.
For the first couple of weeks, let them keep their
office as-is. Set yourself up alongside them as watch
what it is that they do each day. Observe the flow of
communication with clients, employees, etc. Continually
ask questions. Do not simply allow them to do their job
as they did before; you need answers, so question
everything.
Meeting with Employees
Set up a meeting the first day with all the employees.
These people are naturally going to be nervous about you,
their job and their future. Most people abhor change so
be sympathetic to their situation. No matter what plans
you have, let them know:
- There are no major changes planned.
- You are very optimistic about the business's
future.
- Each one of them has a role to play.
- You're eager to build the business.
- You are available to speak to them at any time
regarding any concerns they have
- They are expected to contribute to the success of
the business.
- You're counting on their support to build the
business.
- You realize that there will be a transition period
and it may take some time for them to get used to you
and vice-versa.
The objective of the first meeting is to set their
minds at ease. Open up the floor to questions. Do not
worry if not a single person has a question; they're
nervous, so don't interpret this as anything other
than a demonstration of their anxiety. Don't feel
pressured to reply to anything that you haven't
thought through and never make any promises simply to win
them over.
End the meeting by asking each one of them to prepare
a report, due within one week, that outlines: what they
believe can be done to make them more effective at their
job, and second, if they were the new owner, what
suggestions they would have for the overall business.
Tell them that all reports will be kept confidential,
that you will review it with them individually and that
you expect everyone to have it submitted on a timely
manner (a note here: if any of them are late, you can
expect that person to be a trouble employee and chances
are they will not last).
It's Time To Get Busy!
So you've got the transition period completed,
you're feeling comfortable with the business, the
employees are feeling positive, you've reviewed their
reports, it's now time to get down to business.
| Step One: |
Make the Place Your Own. Get the place cleaned
up. Throw on a new coat of bright paint, have
everyone clean up their work areas, remove old files
and throw out unwanted furniture, old posters, etc.
Give the place a new look. You do not have to spend
much money at all. Set the standard by keeping your
work area spotless. There's no need to be a mess,
no matter what your prior work habits were. You
cannot expect any employee to do anything different
than you so if you, want to run a well-oiled,
organized business, it all starts with you. |
| Step Two: |
Learn the Business and What Oils the Engine.
Perhaps the most critical thing you can do in your
initial tenure is to really learn the guts of the
business. The answers are readily available but you
have to ask the questions. Make it your goal to speak
with customers, suppliers, employees, competitors and
anyone else associated with the business to get a
true picture about the business and the industry and
where you fit in. Generally, the customers have the
answers, and quite often businesses do an awful job
of satisfying the clients. They may think they do,
but the truth is that most don't. As such, dig
into your customers' wants so that you position
the business as a place where they want to do
business.
Your employees are a pivotal link in this process.
Get them involved. They will be far more effective
carrying out plans they have helped develop than they
will executing strategies that have been dumped on
them.
Based upon employee reports and fact-finding, compile
a detailed listing of everything you want to do in
the business… eventually. You can't do it
overnight. However, by noting these potential items,
your business plan will begin to marinate. Work at
organizing your list by the area within the business
(sales, marketing, accounting, operations, etc.) and
keep it up to date.
Develop a 30/60/90-day plan for each specific area of
the business. Follow up diligently to ensure
timelines are respected. Change does not have to be
monumental or drastic; it's improvement that
you're striving to achieve. |
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Step Three: |
Sell Off Useless Assets if Applicable
If the business has acquired useless inventory,
equipment, or any other obsolete asset, then get rid
of it. There's no need to keep any assets around
that take up space and do not produce revenue. |
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Step Four: |
The Marketing Plan
In concert with StepTwo, assemble the marketing plan
for the business. Keep in mind that market, is
without a doubt the simplest thing to do in a
business and something that is made overly
complicated by most companies. Marketing is simply a
matter of finding out what the customers want, and
then giving it to them at terms that make sense to
you and them. End of story. You may buy a business
that excels at marketing, which is great. However,
marketing also requires continuous testing and
measuring. So even if they're great at it, make
certain that you set forth additional strategies
within this discipline. |
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Step Five: |
The Business Plan
Personally, I think most business plans stink and are
completely unrealistic. Companies put them together
to make themselves feel good and generally little of
it ever gets executed. On the other hand, it can
prove to be an invaluable document and a blue print
for success, Therefore, it is needed, but must be
done correctly. A business plan does not have to be a
long document with unrelated information and useless
pie-charts and graphs. On the contrary. Done right
and it can be a bullet-point description of: |
- Everything you want to do
- Who is going to do it?
- How it's going to get done
- When is it going to be completed?
Now you're set. You've got a solid
understanding of the business. You know what the
customers want. You have a plan to deliver it. Your
employees are sold on you; they've contributed to the
company's plan. Focus like a laser beam and execute.
Measure absolutely everything. Strive to get better in
every way and everyday! If you constantly think about how
you can make your business bigger, better and faster then
you cannot help but be successful!
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About the Author
Richard Parker is President of Diomo
Corporation - The Business Buyer Resource Center ™
(www.diomo.com ) and Diomo Solutions,
LLC (www.diomosolutions.com) He is the
author of How To Buy A Good Business At A Great
Price© a 600 plus page how to strategy guide
geared for anyone thinking about buying a business. His
materials are used by prospective business buyers in over
50 countries. Mr. Parker's articles, syndicated
columns and other "how to" guides have been
published extensively online and in various print media
He is also one of the most successful business brokers in
The United States, assisting both buyers and sellers. Mr.
Parker has personally purchased ten small businesses
since 1990. Email
your comments to Richard or visit his
website
This article is © Copyright 2005-2006 by Richard
Parker and may not be reproduced in any format whatsoever
without prior written consent of the author.
The recommendations of reading, reference materials or
links mentioned, are for general informational purposes
only. The materials are intended as a public service and
are not a substitute for obtaining professional advice
from a qualified firm, person or corporation. Consult the
appropriate professional advisor for complete and
up-to-the-minute information. These materials do not
constitute the rendering of any legal or professional
services.
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