After you buy a business, what should you do? That question has many answers and it depends on the kind of business you purchased. It also depends on what your operating capital looks like after a substantial lay out of money to make the purchase. The following items should be considered by the new owner for review and maybe even possible changes. New ideas for expanding the business or improving how it is run should be put into play slowly and not with abrupt measures.
Small changes and big changes
Right after taking over the ownership of a business it is natural for the new owner to put his personal stamp on the business. This move should be done with caution and slowly, as employees are nervous with the change in ownership. Snap changes should be small in nature and big changes should be discussed with key employees who will be affected by the changes. The operative word is do this cautiously and even let a month or two pass before instituting any major change. Rocking the boat right after purchase can be disconcerting to all involved.
If a big change were necessary the owner would be wise to hold a meeting and explain the reasons for the change being put in place. Saving money or an increase in efficiency are valid reasons to make a change in operating procedures. A change that will affect employees take home pay better be explained in detail to each person. Loss of income will cause an immediate reaction that could have long lasting consequences. Changes of this nature should be carefully considered before they become policy. Any change that decreases a person’s paycheck will be resented and should be explained.
Any owner always looks for new products or a new way to do business that increases sales and income. The new owner is no exception; in fact a new owner will be more likely to try something different. Make sure you let your people in on your idea.
Inventory and equipment
Inventory and equipment is always of concern to a business that manufacturers products or does a service like a printing company. Managing the inventory so that you have what you need on time needs to be watched and maintained. The secret is to not over buy and waste cash flow on inventory that can be purchased closer to when it is needed. Most companies assign someone to keep track of what is used and when it should be replaced. This is an important area for a new owner to get the handle on as quickly as possible.
Equipment that is used routinely should be serviced regularly. If your company is dependent on this equipment, then it should be maintained in a timely manner.
Preventable breakdowns should be kept to a minimum. Breakdowns are always expensive in repair cost and loss of work time. If your company is running on old equipment that is nothing but bandages and hope, you better start thinking of buying equipment. Ask your suppliers if they know of any for sale. Suppliers can be an excellent source for finding equipment and special repair people.
Say hello to your major clients
If you can arrange it let the old owner introduce you to the major clients. If not do it yourself. There are several other things you can do when you take over a business.
Send a letter letting clients know that new management has taken over the company and if they have any questions or suggestions, please give a call. Arrange for an open house for any clients to visit and meet the new owners and management. Communication at this juncture is worth the effort. It also will help to alleviate concerns by the client and maybe prevent stories from circulating that could be harmful to the company. It also keeps competitors from stepping in and trying to take your client. Most customers will stay if they have been content to this point.
Let all potential customers know that the company has changed hands and would like to be considered for future work. There are several reasons for this move. Maybe the old owner had a dispute with the potential client. If this is the case, maybe this can be put to rest. You may get lucky and hit a client that is looking to make a change from their current supplier or Service Company
The point is, you should let the world know that the company is continuing and will be run by new people. This is a way to keep existing clients and get new clients. Keep the current customers and grow the business with new clients. This is the way to grow an existing business.
Early in the changeover to you running the company, you should schedule meetings with employees and managers if there are any. This should be a two-way conversation. You want the employee to know more about you and what you are going to do. You can learn more about the day-to-day operations of the company. Ask questions and then listen very carefully. Take notes as this lets the employee know you are listening. Good employees are hard to find and every effort should be made to keep them once you find them. Employees in an existing company have been tested and the ones remaining have proven their worth to the company. At least, that is the supposition that should be assumed at the beginning.
Let some time pass after you buy the company so you can make your own judgments about the current staff of people. This will help you from making mistakes due to wrong impressions. Do not be afraid to show a little humor with the people who are working for you. Humor has a leveling effect and makes for common bonds over time.
Look at where the business advertised in the past and make sure that the Internet is included. Update the company website. New management banners can be rented and displayed for a month or so. When making a decision on where to spend advertising dollars, ask for a breakdown of who will see your ad and the number who will see it. If the viewers seem small seriously think about passing, unless it is a very select group of potential clients. Advertising is a necessary expense that must be used, but thoughtful decisions are in order.
The first few months after purchasing a company are not the time to make mistakes that can be avoided. Changes should be done carefully and explained to the employees. Advertising should be continued, with the mention of new ownership. Employees should be met and interviewed for information and evaluation. They probably know more about the company than anyone. An effort should be made to meet important clients since they are the source of cash flow to the company. Check the inventory controls or the lack of them. Make sure that some one is responsible for this part of the business. Ask the most knowledgeable people in the company about the state of the equipment and is there a maintenance program in place. Prevention of problems is a necessity for any company. The most important thing an owner can do is ask questions and listen.