Buying an existing business has lots of benefits. You could potentially get an established customer base, easier financing, existing systems and processes, established employees, and more. However, there are a few vital lessons you need to keep in mind when considering buying a business.
Any market is bound to change given enough time. Before and after purchasing a business you should be closely monitoring changes in the appropriate markets. Market expectations, in particular, are a major factor in increasing the earnings of any business you buy. The existing processes and systems in the business you buy may have become outdated. In other words, they no longer meet the expectations of the customers. If this is the case it is time for you to change the way the business operates in order to meet these expectations.
After purchasing a business and observing the existing processes, you may see that there is a supreme lack of processes. Maybe performance reviews aren’t standardized, or there is not a proper list of company goals. Maybe the accounting process is different from department to department. Any process within your company needs to be easy to follow. No accountant is going to want to deal with having to pay each department using a different process. Similarly, no executive is going to want to read different styles of performance reviews for every department. You can probably see what we are getting at: processes need to be easy to follow and standardized whenever possible.
When processes work in unison across all departments of a company you will start to see better collaboration between departments. What’s more, the overall efficiency of day-to-day operations within the company will start to increase before your eyes.
Although at first glance it may be apparent that you can get your newly purchased company profitable within 3 months, being conservative with this forecast is in your best interest. Nothing ever goes 100% according to plan, and your shareholders will appreciate you sticking to schedule. So, giving a 6-month projection when you only expect it to take 3 months gives you wiggle room to deal with unexpected circumstances. Maybe a new piece of legislation changes the market, or a new competitor enters the market. Giving yourself more time to adapt to these changes will take the pressure off in the event of a major market change.
Looking to become a business owner in 2022? At Murphy Business, we understand how overwhelming and complicated buying or selling a business can seem. Finding the right business to buy or the right buyer to sell to is a lot of work. That’s where we come in. Our experienced team will help you find the right buyer for your business or the right business for your buck!
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