A business transition can be difficult — but what comes next might be even more challenging
The process of selling a business can require such a great amount of effort in and of itself that developing a plan for success after the sale is completed can sometimes lack the attention it deserves. Whether or not you recently purchased a business or are simply thinking about making such an investment down the road, here are some important considerations to make.
Conduct your due diligence.
Sometimes first-time buyers come in to their new business with unreasonable expectations regarding salary and income level if they haven’t done a deep enough dive into the business’s financials. For example, the new owner might expect a $250,000 annual salary when the business can only support $100,000. Before purchasing a new business, take the time to bring in a consultant who can provide a thorough analysis of the financial records. The selling party may not be representing their financial status truthfully, and you’ll want to have realistic expectations of your income level once you take over.
Continuity is key.
From a client service standpoint, make sure that any operational changes are minor and as seamless as possible. Will they be billed the same way for services or products? Are they accustomed to working with a particular salesperson when the new owners want to move to a centralized sales team? Such changes might seem minor to some, but could represent important shifts to the client, perhaps even impact precisely why they enjoyed conducting business with the company in the first place. Don’t give anyone the opportunity to have doubt during the transition; they may look toward a different service provider.
Transitioning a family business?
Establish clear parameters before the sale.
When a family member, usually a parent, is transitioning ownership of their business to a younger generation, there might be concern that a child, or children, taking over the business will not be respected as the new owners. As the transition is taking place, make sure there is a solid plan established that describes exactly how business matters are to be handled after the sale, along with job roles and expectations.
That way, if there is any dispute after the sale, family members can easily go back to the document to ensure the new executive team is following established protocol.
Don’t forget about the human element.
Losing clients is bad enough, but losing clients and long-time associates can be a devastating blow to a newly-purchased business. Make sure you know the unwritten rules. Perhaps before the sale, associates weren’t penalized for getting to work five minutes late, but you’d like to install a time card reader that “dings” associates each time they don’t arrive on time. In many cases, the company culture is a big reason why a person chooses to work at a certain organization, so making large cultural changes risks making a percentage of associates unhappy. If these associates were a big part of the organization’s success before you took it on, it’s likely they’ll continue to be part of its success after, as well.
