When Seemingly Smart Buyers Make Fatally Not So Smart Decisions!


Buying A Business Strategies

I once closed a deal where the seller was like any other seller, wearing 6 hats at once and doing his best to survive. For any of us who have owned our own businesses that had employees, rent to pay, fussy clients to appease, books to deal with, accounts to balance, checks to write, suppliers to pay, etc, you get the picture. We learn early on that rocking the boat means having to deal with the ramifications. I'm not saying that sometimes it isn't necessary but not on the first day you take over a business.

If you are buying a business, you probably have really good ideas about changes you would like to implement and ideas to sell more, be more efficient and more organized. All great, except that I caution you to be careful about the toes you are stepping on today they will be attached to the feet that will walk out on you tomorrow.

This is exactly what happened to my buyers. On the first day they took over they were so critical of the previous owner and the way the business was set up and being run, they managed to offend almost everyone in the business on the first day. As a new owner of an existing business your primary job on day one is to observe and silently note the changes you would like to see over a reasonable period of time.

In this case, the buyer thought she was criticize the seller but in fact it was a key employee that had organized much of the front office and this employee is critical in the success of this business and well known in the industry for being very good in her field. If you take over a business and you aren't happy with one or some of the employees, please exercise some common sense! You will need to fully understand the business you just took over and find a suitable replacement, this takes time!

These buyers displayed intelligence throughout the deal but something went very wrong when they took over and they felt that they had to show everyone "who's boss". They insulted the manager who is an excellent sales person and drives most of the business, decided to change the contract of another key person who now doesn't want to be associated with them and reduced the pay of another skilled key employee who performs one of the most popular services.

The bottom line is it's very easy to criticize people from an ivory tower but until you walk a few miles in their shoes I suggest you keep your attitude friendly, your ears open and your mouth closed until your ready to deal with the ramifications.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business

Contributor:

Christina Lazuric, CBI
Areas Served: Orange County
Phone:  949-257-7823 Cell, 949-257-7823 Text
Premier Brokerage for selling Orange County Service based businesses since 2005! CBB provides a step by step approach to Business Brokerage, M&A Services, Business Consulting & Valuations. Contact me about selling or buying service based businesses: 949-257-7823 Cell.

Comments Regarding This Blog Post


I had a similar situation with buyers who bought a cafe on the first floor of an office building. The cafe essentially had a captive audience of the occupants of the building, as little traffic from the street wandered into the cafe. The new buyers immediately raised all the prices, and even started telling customers that they would charge them extra if they took too many napkins (seriously). Anyways, I got a call from the buyers saying the business had really gone down hill, and after talking with them realized what they had done. My advice to new buyers is to keep the business as it was before, you can clean it up, but don't make too many drastic changes, and always remember customer service, because people have options, and once they leave, they are difficult to get back.






  Helpful Resources To Assist In Selling And Buying California Businesses
William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Lee Petsas, Business Broker: Southern California Area

Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.

William Park, Business Broker: Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Ryan Clark, Business Broker: Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.


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