There are many challenges for a new small business owner, but taking over a business that’s already been a part of the community for years has a unique set of challenges. One of the biggest you will face is this: change can be hard.
Once you have taken over the operations, you’re going to ask yourself “what needs to stay the same, and what needs to change?” To keep business moving in the short term, you probably won’t make big changes right away, but eventually, you will want to put your own stamp on things.
While implementing your own processes should help introduce new efficiencies to the business, there are several aspects you should consider:
Together, let’s explore how you can audit the operations of your small business and create new efficiencies after stepping in as the new leader.
One of the first things you’ll want to do is take a look at the existing employees. If you plan to add some new processes or more business, you may want to consider bringing in more people to take on the extra work. You may also consider downsizing your workforce if the business has become more efficient, or if those employees simply aren’t a good fit for your culture.
The previous owner will have established partnerships with vendors who supply goods to the business. You should evaluate those relationships to ensure that you can work with them, and that you’re still getting the best prices and the best products.
You’ll also want to look at the team of experts: the business’s CPA, lawyer and commercial banker. The existing group may know the business from their years of experience working with it, but you need to make sure whoever is filling those roles is a good fit to work with you.
If the previous owner has been in business for a long time, there’s a chance they have been using outdated technology, or they haven’t embraced technology at all. From computers to point-of-sale systems and inventory tracking systems, you will want to look at how the business is currently using technology and what new technologies could be implemented to increase efficiency and profitability.
You should also look at the business’s online presence. Is the company already on social media? If not, you’ll want to start business accounts on platforms that your target audience is using and are best suited to your type of business. This gives you the opportunity to get the word out about your products and services, as well as interact with current and potential customers.
Also, make sure your website looks modern and, if it’s not already available and in use, consider adding online shopping to your website and social media channels.
Marketing has come a long way over the last 20 years and the previous owner may have put a lot of their focus on traditional advertising media, like print, radio and local television. While those methods may still be worth investing in, transitioning your marketing to digital platforms like social media and search engine advertising is effective and cost-efficient. You can advertise on social platforms like Facebook, Twitter and LinkedIn, as well as search engines like Google, Bing and more.
Choosing how to manage the business’s finances is one of the biggest decisions you’ll need to make. First of all, you’ll need to decide if you want to continue the business’s relationship with its current bank or switch to a different financial institution. Beyond that, a commercial banker can help you explore your financial options, such as:
You’ll also need to audit the financial reporting and documentation process. We have seen many cases where someone buys a business from an old-school owner that either had outdated or inadequate reporting procedures. You’ll want to work with your CPA to make sure that your finances are adequately reported.
There are a lot of changes to consider when you take ownership of an established business with a reputation in the community. As you look at existing processes and operations, be sure to consult your CPA, lawyer and commercial banker to help make changes and find operational efficiencies for your business.
We have experience helping entrepreneurs buy existing businesses. Check out this blog article to see how our services helped Rob and Carol Gilbertson put their own spin on The Prime Rib, a restaurant in Spencer.
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