For individuals who want to buy a business, they often spend so much time searching business for sale listings and getting immersed in the process that they lose sight of what they need to do after they close the deal. The longer it takes to get a deal done, the more prevalent this issue becomes.
There is no escaping the steps that a prospective business buyer needs to follow – while they can vary slightly between deals, overall, they are fairly standard – for simplification, these steps include:
- The search
- Meet with sellers
- Review financials and compile a valuation
- Initial due diligence
- Present an offer
- Arrange financing
- Formal due diligence and contracts
- Close the deal
Absent from this list is what many inexperienced buyers fall victim to which is to overlook what is the plan that will be implemented once they take over the company. Throughout the process of one’s review, it is critical to begin to compile the strategic plan for the business. Be optimistic but not delusional.
The key question is: realistically, how can you add value? Prospective business buyers can get caught up thinking of all the great things they will do once they take over and they get carried away thinking that for some reason they are going to implement all these wonderful new initiatives and processes that the current owner did not do well or even think of doing – big mistake!
Nobody knows the business as well as the owner. Dig in to what he/she has done over the past regarding new initiatives, where do they believe the opportunities exist, why haven’t they exploited them, what growth plans did they implement, what worked, what failed, etc. Investigate how you as the new owner can add your know-how to grow the company.
This does not mean wholesale and immediate changes once you take over. In fact, for the first few months, it is imperative to get a deep sense of the business and learn its operations even if you have a wealth of experience in the sector.
Once you get the feel for the true guts of the business, develop a 100-day plan. You want a complete buy-in from all the employees. Do not take on too much. Make smart changes, however this does not mean to act slowly. Understand why the company has done things certain ways. Often it is the right way; but just as frequently it is wrong and simply because a certain process has been in place for a long time does not mean there isn’t a better one.
Question everything and everyone. Once you identify a problem, get it resolved. Gather the facts and make decisions. Some will be right; some wrong, but the key to being an entrepreneur is being able to make the decisions once you have assembled the data/information and then forging ahead with laser-like focus.