How to Nurture an Existing Business

You’ve found a great business with lots you can get excited about. Then your due diligence uncovers some questionable sales figures, or some debt that has not even been mentioned.

You could easily walk away at that point – but does a flawed business have to signal the end of your interest? Or could it mean that, at the right price, you could still acquire a business that is actually very salvageable?

Here are some issues you might want to consider if this situation arises:

Can you salvage an enterprise in debt?

Business problems arise for many reasons, but if you really take the trouble to understand the issues and calmly assess the situation, not every business flaw is terminal.

For instance, an off-license with small, short-term debt problems can be overcome provided you have conducted proper due diligence, analysed the true reason for the debt position, and are certain you know what to do to prevent this situation recurring in the future.

Or, a hotel owner who has lost their spark to bring the business forward can often seem more worse for wear than if a new proprietor were to come in with a whole new outlook.

The key consideration here is: Can you quantify the true financial position beyond doubt? It’s never wise to just take the seller’s word – especially as it took your due diligence team to spot the problem!

So, always err on the side of caution, and until you get right to the bottom of things, it’s always best to assume things may be even worse than you presently surmise.

What if sales have remained static?

Sometimes a vendor is too wrapped up in certain aspects of the business and may not fully appreciate how stagnant the sales picture has become.

Alternatively, the owner may have been in business too long and just failed to move with the times. More specifically, some owners may too readily assume they cannot compete in an online marketplace – without ever exploring, or even understanding, what the issues are and what is really at stake.

If you truly understand the sector, your fresh pair of eyes may spot opportunities for new revenue streams or innovative ways to revitalise existing product lines or services.

Be aware that like much else in business, at its root this may turn out to be another people problem: Perhaps a jaded management, or a demotivated workforce (who may fear their jobs are on the line?).

Turning things round may involve not only re-booting operations but also giving your staff team good reason to feel they still have a future with the company.

Under new management

Assuming you have analysed any substantial flaws and are sure they are definitely fixable, then you can turn your thoughts to how best to exploit your status as a potential new owner.

Because you are not directly responsible for historical shortcomings, you should be able to enjoy a period of grace during which you will be perceived as providing the business with a welcome ‘breath of fresh air’.

That should be your cue for instigating a brand new marketing campaign to attract a new customer base.

Along with that, implementing a proactive strategy to show your existing customers, suppliers and other business contacts that the company is still very much alive and kicking and has plenty of plans for a more prosperous future.

Just because a business for sale may appear to have some flaws that does not necessarily mean you have to turn your back on it.

If you can identify an enterprise with lots of hidden potential which essentially needs to be nurtured back to health after a period of neglect, then you could be looking at striking a great deal and acquiring an established business which you can soon revamp and bring a fresh outlook to.

By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies. 

 

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