Things to Consider When Acquiring a Business

As you think about ways to start or grow your business, you might consider acquiring an existing business. This can be a great way to get established or grow quickly. However, buying a business can put you on the fast track to heartache if you don’t do it right.

After experiencing multiple acquisitions, as both seller and buyer, as well as helping multiple clients through the process, here are some key things to consider if you’re thinking of buying an existing business.

Building Your Team
DON’T: Immediately cut team members. You don’t want to scare the whole team by making drastic cuts early on. You also need time to evaluate the team members and the roles they play within the business. If you know that cuts are required to make the business make sense, have a plan before you purchase as to how you are going to handle that and how to communicate it.

DO: Establish a relationship with the existing team. It’s likely that the business you purchase will come with employees. These employees will be key to the business continuity. If you don’t spend the time to build a relationship with the new team, they may worry about their place within the business under new ownership and may look to go elsewhere.

Making Changes
DON’T : Change everything. If you found a business to purchase and you felt like it was a good business, it doesn’t make sense to change everything the moment you take over. If you’re buying a business to fold into your already existing business, take the time to figure out what processes and systems the purchased business may be using that could be helpful in your business before you automatically switch over to your way of doing things.

DO: Learn about the business. Understand why the business was operating the way it was. Ask questions. Listen. Consider changes only after you’ve had some time to learn about why the business operates the way it does and how your changes will affect your team, your customers, and your bottom line.

Spending
DO: Watch your spending. Transitioning any business comes with cost. There is a lot going on when you first transition and you tend to say yes to things more quickly because you want to make sure you don’t have any disruptions or delays. However, you may look up a couple of months in and realize your credit card bill is twice what you expected and you start yourself off in a hole you didn’t expect.

DON’T: Try to cut spending too fast. If you have plans to cut spending to optimize profits, that can be a great way to see a return on your investment in the new company. However, be careful not to make changes too swiftly. You might start experiencing quality issues if you switch to a new vendor or realize services you thought were a luxury were actually a necessity. Take your time to evaluate vendors and costs. You could cost yourself more in the long-run if you make decisions too hastily.

Getting Feedback
DO: Ask for feedback. Ask your new customers. Ask your new team. Find out what others think about the business, it’s services and products. Just because you ask, doesn’t mean you take every piece of advice you receive, but if you don’t ask you don’t even have a chance to evaluate the feedback.

DON’T: Assume you know best. You can learn a lot by asking others what they think about your new business.

Acquiring an existing business can be a great way to get started in business or to expand your current business. Just make sure to take your time implementing changes and listen to feedback from those around you.