Changing hands of ownership can seem both exciting and daunting to all parties involved, but it's important that a smooth transition occurs to maintain or achieve success of the business. Here are some tips I recommend ensuring things go smoothly:
1. No major changes: I specialize in bars and restaurants, although I sell all types of businesses, but a major piece of advice I would give to any new owner would be to make no large changes to the business. A new owner should make no large staffing changes, price adjustments, major renovations, because this could hurt foot traffic that the previous owner has established. Customers are fickle, and many come to a business based on habit, and when they sense too much change, they'll often stop coming, and once a customer leaves, they are difficult to get back.
2. Maintain high employee morale: Point number two plays into point number one, no major changes, but it's so important, that it bares repeating. Many customers have developed a relationship with the employees that have been solidified long before the business was listed and changed hands, so it's extremely important that employees feel secure in their jobs and are productive, because many times, if not most, they know more about how the business runs better than the new owner, and can be a major asset to ensuring success.
3. Strong training period: Knowing the ins and outs of a new business can be overwhelming, and many times an old owner might have "seniorities" and want to be on their way, but it's imperative that the new owner is properly trained. The old owner should stay on after the close of escrow for a minimum of two weeks or 80 hours, and introduce the new owner to customers, so they know that the business is in good hands. If the owner has carried a note, they may want to stay on longer, possibly as an employee, if they can, to make sure the business succeeds, because future loan payments depend on the business being a success.
4. Meet with vendors: A new owner should familiarize themselves with vendors and establish a relationship with them. Having a good working relationship with vendors is important and in a way they, with their timely arrivals and flexibility, help a business owner succeed. During the due diligence period, a new owner should see a paper trail of who the current owner does business with and continue to use their reps and vendors to maintain quality and consistency.
Unless the business is a total disaster, and a new owner creates a major shake-up, but then there really is no transition because it's an asset sale, and total change occurs, but other than that, a major theme that I would recommend to any new owner is: keep things the same, at least, at first. Make small changes, nothing major. There are other things that play into a smooth transition, and I encourage others on this BizBen Discussion Post to post their thoughts and ideas.