How Does A Company's Culture Effect The Sale Of A Small Business?

Comments & Replies: 4     Views: 9687     Posted By: Peter Siegel MBA  Peter Siegel MBA: BizBen Founder, Lead Advisor

When purchasing a small to mid-szied business, there are a multitude of things to evaluate. One area that is often overlooked is the business's culture. Peter Siegel, MBA with BizBen discusses with potential buyers the importance of understanding how the business runs on a day-to-day basis.

Topics: Buying A Business, Selling A Business     Tags: buying a business, selling a business



Before purchasing a small to mid-sized business, you must perform a thorough examination of that company during the due diligence process. Reviewing financials, valuing assets, and inspecting equipment, are all necessary and important matters to focus on, but there are other areas of concentration that don't receive enough attention on the front end of a business deal. One of these factors that is often neglected is the company's culture.

Company culture is primarily focused on the business's employees, from the overall attitude of these employees, to the morale and comradery of the group as a whole. You will want to learn as much about the workforce as possible, because these are the very people that will be contributing to the success of your business on a daily basis. How do these people feel about the job they do? What motivates them to come to work everyday and put their best foot forward? After you identify these things that will help you become an effective leader, you will want to figure out how the company is structured and how work is best completed.

Understanding the core values and structure of the business will help you understand what day-to-day operations look like and where the bulk of decisions are made. For example, does the business value their employees' independent creative processes and allow them to make their own decisions, or is their a hierarchy where the orders are handed down from management for the employees to follow? To learn the most about company culture, you could briefly interview employees that are in supervisory or managerial roles. Obviously, you won't have time to interview everyone, but it would pay off to gain different perspectives on how the business operates, to ensure that you are inheriting a healthy work culture that you can maintain.

The thought of inheriting a mess is enough to scare the majority of buyers out of purchasing a new business. If the company's culture is effecting the production of the business in a negative way, you must identify the main causes and determine if you are readily capable of fixing them. Would inheriting a workforce with no motivation and zero comradery be too risky, or does this give you the ability to start new and clear out the problems at the very beginning? Buying a business is filled with risks, but having a game plan and clear vision for your new business makes it much easier to overcome these small hurdles, and build a successful business.

Replies To This Comment
 
I agree, having a positive company culture is not only beneficial to the employees and owner, but also to their customers, because happier employees will stay at the job longer and give better customer service, which later equates to higher sales. An owner can have monthly meetings with their staff to identify goals and work out "wants and concerns". Creating the right company culture should really start with the HR department, and so if a new owner decides to let get of employees and hire new ones, they should really take their time to find someone who will work with others in the company.


Contributor: SF Bay Area Business Broker

In addition to the current culture, it is important to consider how a culture may change if a new owner comes into the picture. Many employees may feel the current owner isnt interested in the business because they don't invest in training or new equipment and this affects employee morale. However, when employees see a new owner who spent a significant amount of money to acquire a business shows that they are serious about it and the employees may in turn, show new vigor in their duties. Also many small business owners don't take advice very well especially from employees for many reasons but mainly because the owner has years of experience and don't see the opinion of new employees as valuable. However a new owner who listens to front line employees and begins to implement the changes they suggest will see a revitalized culture among the employees. If you can find a business and pay an amount based on what it has done in the past, but make simple changes to affect profitability in the future you have the winning combination. Employee morale and company culture are one of the easiest changes to make in a small business, without spending any money.


I recently met a human resources consultant who enlightened and broadened my perspective about due diligence. She is often called in by buyers to review and advise about not just the ongoing employment of key personnel, but also to assess the culture and atmosphere of a business in a professional, dispassionate, objective way. It makes great sense, since so much of business success depends on the people and their ability to work effectively and efficiently as a team, both internally and externally. So, for anyone purchasing a business with more than a few employees, I highly recommend investing in an HR specialist to do some investigation of the business during due diligence.

Contributor: Broker/Consultant: Elderly Care Services

Understanding "company culture" is imperative in the Elderly Care Home field.

Just imagine the mix of personalities at a care home; you've got Elderly Clients, Hospice Nurses, Care Givers, Dishwashers, Doctors, California State Regulators, The Gardener, an Administrator, ... Makes my head hurt just thinking about all the different personalities, and skill sets. But maybe that's the beauty behind the success of an Elderly Care Home, it takes a village to care for our Kids and our Elderly.

My suggestion is to get in as soon as possible and learn as much as possible about all of the Employees, the Care Givers, and Residents prior to taking ownership. Confidence is gained in experience and time on the job. Enjoy.


  Helpful Resources To Assist In Selling And Buying California Businesses
Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services In California

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.

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.

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.

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

Helen Yoo at 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.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Absentee Run Businesses - A Myth Or Reality When Buying A Small CA Business?

Buyers search for an absentee business, wanting to collect profits generated by a successful enterprise without having to stand at the sales counter or cash register, without having to cook, operate equipment or talk to customers. Peter Siegel, MBA offers his intake on absentee run businesses.

Buyer Beware: Does A Company's Culture Effect The Sale Of A Small Business?

When purchasing a small to mid-sized CA business, there are a many items to evaluate. One area that is often overlooked is the business's office culture. Peter Siegel, MBA with BizBen discusses with business buyers the importance of understanding how the business "feels" on a day-to-day basis.

BizBen ProBuy Program - Professional Assistance With Buying A Small Business

Buying a California business can be a confusing and/or frustrating process for many business buyers. Statistics show that over 80% of all buyers never end up buying a business. The BizBen ProBuy Program assists potential buyers of California businesses with the process of buying a small business.

Buy A Business Or Start From Scratch? 5 Key Differences For Business Buyers

Some buyers believe it's better to start a business from scratch rather than buy an existing enterprise. While this may be good advice in some cases, usually it's not the best strategy. Here are five tips to help a buyer make the right decision from from Peter Siegel, MBA (BizBen Director).

Should A Buyer Be Allowed To Operate A Business Before The Close Of Escrow?

Business buyers, brokers, owner/sellers all ask this question at some point. So I decided to ask some of the top Intermediaries in the California marketplace what they thought of the idea. Most of the ProIntermediaries on BizBen agreed with me on taking early possession before the close of escrow.

What Are Business Buyers Biggest Mistakes? The Pros Examine The Most Common

A business buyer in our ProBuy Program searching to buy a California business asked me to sum up what I though the biggest mistakes business buyers make when they search for and bought a small business. I asked BizBen ProIntermediaries their thoughts on the matter and received a diverse response.

Back-Up Offers: Crucial When Buying Or Selling A California Small Business

An often overlooked aspect of selling (or buying) a small business is taking back-up offers during the entire process of selling (or buying) a business. Most sellers (or buyers) don't realize that over fifty percent of all deals/contracts fall out escrow or contract for one reason or another.

Selling Your Business To One Of Your Employees - A Good Idea? Pros And Con

After investing years of time and talent into a company, many small business owners want to feel like they are leaving their business in good hands and for that reason, some sellers opt to sell their business to an employee. Peter Siegel, MBA talks about the pros and cons to taking this route.


Tim Cunha Business Brokerage
Escrow Services Diane Boudreau-Tschetter
Chuck Post Laundromat Industry Expert
Michael Brewer, ABC License Consultant
Facebook
Twitter
Linkedin
Vlogs and Podcasts
New Postings Reports On BizBen Sign Up
BizBen ProBuy Program
Instant Email Alerts On BizBen
BizBen ProSell Program
Advertise On BizBen


BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 Dublin, CA 94568 © 1994 - 2021, All Rights Reserved


New Info Daily:   Facebook   Twitter   Linkedin   Vlogs and Podcasts



500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Key Tax Considerations In A Deal: Deciding Between An Asset vs A Stock S...
Read More News
Sellers Ask: How Long Should I Wait For The Buyer To Do Their Due Dilige...
Read More News