Business Brokerage .
Steve Skrlac, MBA, CFA
sales representative
.
Serving Toronto / GTA / Southern Ontario
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How To Transition a Business You've Purchased
When a small business is purchased one of the most frequently asked questions is how will the business be transitioned to the new owner? Most prospective purchasers of smaller businesses worry that when the old owner leaves the picture that so will the customers and that the business results will ultimately suffer. In most instances, this is in fact not an issue if properly mitigated. This article will examine the issue of properly transitioning business customers to a new owner.
Put it in writing
It is absolutely important that when you buy a business that you put the training and transition plan in writing at the time of the offer. Be as specific as you can be about items like duration, expectations, compensation or any financial holdback. Clarity here will save a lot of second-guessing between the purchaser and vendor in the future. A transition plan can be determined during a conditional due diligence period of the sale.
Solidarity with the old owner is crucial
If you are the buyer of a small venture that has an established track record with its customers, it is important to demonstrate that the business is being sold in good faith and that the old owner stands behind or endorses the new operators. Customers do appreciate being kept in the loop. A personal visit to major clients with the old owners usually goes a long way. Developing rapport early on is key.
Continue to provide good customer service
When you buy a small business for sale, you will want to show the customers that you (the new owner) will continue to deliver the same great customer service that they have been accustomed to. The last thing a client wants is for the new owner to stop delivering the service they expect.
Keep prices stable
Taking over a business and immediately raising the prices on its customers may not be the best strategic decision you can make. If you feel that the prices the company charges are too low, take some time to prove yourself to the customers first and develop a relationship with them before you immediately increase rates.
Keep communication open
It’s important for a business buyer to keep the lines of communication open with customers, especially in the beginning. Consider a simple newsletter to mail out to your recurring clients. Give them a chance to get to know you and outline some new ideas you have in store for the business that will make dealing with you easier and more enjoyable.
Exceed expectations
Try your best to exceed the expectations your new customers have of you. Before they get to know and trust you, some clients may feel apprehensive about dealing with a new company owner. This is especially true if they’ve deal with the prior operator for several years. If you exceed their expectations, be on time and deliver what was promised you will have most likely cemented that relationship for a very long period of time.
Talk to other people who have bought or sold a business
Get a sense from other people that have bought a small business. See how they did it and what did or didn’t work for them. Talk to local business brokers to get some input from a professional that sells businesses for a living to give you some advice.