by Deborah Sweeney, CEO of MyCorporation.com| Featured Contributor
Buying a business presents its own set of unique challenges. Yes, you usually get to skip the startup period where you have to struggle to claw out a reputation in a sea of competition and bring in customers. However, it’s important to note that the current owner might be selling their business for a variety of reasons. Maybe the business is struggling more than they let on or they’re sinking a lot of time into it without much of a return on investment. Chances are they won’t let you in on some of the “surprise” internal problems before signing over the business, but there are some steps you can take to avoid any extra shocks or unforeseen situations before you complete the transition into being a business owner.
1. Remember Due Diligence
Before you get a chance to sit behind the boss’s desk, you’re more likely to be spending a lot of time sitting through meetings, negotiating, and signing contracts. It is very easy to be lured into complacency, bolstered by a false sense of confidence gained from these official talks. Don’t let this happen, or you will be in for a nasty shock when the business changes hands. Meet with employees, look at the numbers, and spend a week or so immersed in the company so you can get a good feel for how it operates. This natural, day-to-day exposure will show you how things are truly run, and what problems you should plan on addressing. There is always recourse if things don’t go right and you feel like you were sold a bill of goods, but it’s much less expensive and time consuming to undertake substantial due diligence to ensure the business is what you think it is.
2. Lay Out a Transition Plan
What’s going to happen to all of the employees currently working for the business? Are you going to replace any of them or are you going to keep things as uniform to the old management style as possible? Every business is different and some businesses will need more changes than others. Even if the changes you’ll make are minimal, you should still have a clear, open plan for transition. Let the employees and executives know what changes you think you will make on day one – rumors thrive in an office environment, and the last thing you want is a room full of bitter, hostile employees who think you are going to fire the entire office when all you really plan on doing is replacing a few key managers.
3. Stay Calm, Stay Organized
Buying a business is tricky, so you will either have to be hyper-organized or have some sort of support team in place. Legal counsel is highly advisable, and at the very least you need to hire an accountant to help look over the numbers. If you can swing it, try bringing in some of the management team currently running the office to help you stay on top of everything. Someone who knows how to run the company’s HR department will be useful when planning hiring and cuts, and having an assistant attend meetings with you will help with notes, paperwork, and to-do lists. Staying organized saved me a lot of time and stress when I decided to buy MyCorporation, and was one of the key factors in making my transition into the CEO role a successful one.
Unless you have a crystal ball handy, there are still going to be a few surprises waiting for you when their business finally becomes your business – “the best laid plans of mice and men oft go astray.” The trick is to do all that you can before you buy the business so, when these surprise problems inevitably pop up, you know how to solve them. If you follow the legal and financial advice given to you, know how the business is run, and have a solid plan in place for the rocky transition period, you should be very happy with your new business. Plus, it’s always fun to be the boss!
About the Author:
Deborah Sweeney is the CEO of MyCorporation, an online filing services company that specializes in incorporations and LLCs. Find her online at mycorporation.com and on Twitter @deborahsweeney and @mycorporation.