Tips for a successful transition after buying a business

David Fuller: 12 things you need to do AFTER buying a businessNegotiating a deal and buying a business is an exciting time for entrepreneurs. However, what you do in the first few months after your acquisition can be critical to your future success or failure. Let’s face it you have a lot riding on this investment, so you want to make sure to get it right!!

Here are some tips on what you might consider doing in the first days, weeks and months of your business ownership that will help set you up for success.

  1. Work with the previous owner to ensure a smooth transition – While your letter of intent and contract of purchase and sale of the business will outline the amount of support you get from the sellers, you will want to make the most of this time. Ask lots of questions and take lots of notes. This is precious time, don’t let it go to waste. Have a list ready of questions you want answers to and knowledge you need to know.

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  2. Have a communication plan ready to go – You should start working with the current owners about how and when you will communicate with the staff, suppliers and customers about the transition. Having a communications plan, even if it is simple, is critical.
  3. Meet with your staff – Your new team will be nervous when they hear that the owners have sold the business. Imagine what it must feel like when someone new takes over the business. They are worried that they might lose their job and that there will be cutbacks, new wage schemes, and new work requirements. Most people fear change, and your purchase of the business has the potential for considerable change in their lives. Put them at ease by sharing your vision for the future of the business. Let them get to know you and empower them to grow your business. Yes, change will come, but before you make significant changes to your staff, you will need to know who is key to the success of your new business.
  4. Contact your vendors – Like your staff, your vendors will be wary of change. They had a relationship with the previous owner and will be unsure of you. You will need to establish credit and trust. This may require lines of credit or credit cards. In some cases, your vendors may not want to extend credit or the same terms as they did to the previous owners. It will take work to ensure that it is business as usual.
  5. Ensure the business can operate – You will immediately need to ensure that your doors stay open in the transition and that you are getting paid. To do this:
    1. Set up your bank and ensure you can take your customers’ money. This will include deposits from your point of sale and merchant credit card accounts.
    2. Ensure your payroll is set up correctly – Your new staff will want to be paid; failure to do so will have catastrophic consequences.
    3. Business insurance is a necessity. It may take a week or so to get a couple of quotes. Check with the sellers to see if the insurance can be transferred over to you. At a minimum, find out from whom they have purchased insurance and the cost so you have a reference point.
    4. Tax accounts – Governments frown on businesses that don’t pay taxes. Having your accountant set up your tax accounts is important.
    5. Business Licenses – Most municipalities require businesses to have a business license. Ensuring you have the proper permits to operate your business will save you plenty of grief.

This should get you through the first week, but, over the upcoming months, you will want to:

  1. Meet your key customers and put them at ease
  2. Ensure your record keeping is working and your files are kept up to date and following processes that have been established and are the foundation of your new business.
  3. Review your customer service policies to ensure your customers feel the love.
  4. Learn the business so that you can consider ways to trim the fat in the future. Making changes too quickly may be a mistake; however, making notes about questions you might have about certain aspects of the business as you see them provides great discussions with the previous owner during their time of support.
  5. Develop a marketing plan – You have communicated with your team by now, but letting the world know about the business will be essential and a marketing plan is crucial to that success.
  6. Create a 90-day plan for your new team – Sitting down with your new management team and coming up with a 90-day plan that looks at what is working well, what is not working and what needs to change and then picking three or four things you can do over the next 90 days sets the team in motion.
  7. Get financial updates and meet with your bankers – So now the business has been operating with you as the CEO for a few weeks or months, put your investors at ease by giving them an update.

Of course, there are other little details that are unique to each business purchase. However, knowing what you will be doing in the first few hours, days and weeks of the takeover is key. Business ownership and acquisition can be exciting and profitable. Having a plan will reduce your stress and the feeling of being overwhelmed.

Dave Fuller is a Commercial and Business Realtor, award-winning business coach, and author.

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