The prevailing rule of thumb is that it’s always easier to buy an existing business than start one from the ground up. Yet typically this involves buying a struggling venture; successful business owners aren’t often fast to sell their companies. How to actually manage to turn an existing business around to make it worth your while is undoubtedly easier said than done, but it’s not impossible. Even with minimal knowledge of the business at the start, a quick series of steps can put you in a position of profit:
Know the business you’re getting into before making the investment. If you think “anyone can run a bar” you probably need to do more reading. Thanks to the internet, it’s never been easier to become an “amateur expert” of sorts in a matter of hours. However, choosing which online sources to trust is the hard part. Play it safe by beginning your journey on Wikipedia, and then follow the citations at the bottom of the page to confirm information is correct. Consult secondary sources – ideally government and academic websites to verify any information thus far only available through anecdotal evidence. Never trust a standalone blog post or website to give you the entire breakdown.
Get the most out of existing equipment. Struggling businesses are unlikely to have state of the art machinery and appliances, but that doesn’t mean a complete replacement is in the cards. Companies like wear plate provider AJ Weller specialize in extending the life of industrial components. These help reduce the level of investment needed to get a recently purchased enterprise up to snuff.
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Most folks choosing to buy a struggling business have the same thought: “I can do this better.” This, in turn, often boils down to improving operations. Whether it’s reducing staff requirements, better tracking inventory, renegotiating prices along the supply chain, or simply switching up the hours of operation, your projected methods must be ironed out before finalizing a transfer of ownership. Otherwise, you may be counting on moves which the original owner already tried without improvement.
Be ready and willing to invest in a fresh coat of paint and resurfacing. Just enough to make it look and smell new and exciting, without sinking tens of thousands into a complete overhaul. The rules applying to restricted renovations carry over; less is more, especially when more can lead to fines and cost overruns. Unless an existing setup is glaringly inefficient, ugly, or otherwise ill-suited for the venture, leave it be until enough revenue is generated to invest in improvements with confidence.
Interview existing staff. Determine who is worth keeping. Get on the good side of these staff members, as their insider information is essential and know-how is often irreplaceable. If major changes are coming down the pipe, make it clear in a meeting so nobody is startled by the adjustments. It may be your business, but it’s their livelihoods on the line, so make a point to consider their opinions and points of view.
Identify the major sticking points regarding why the original owners were losing money. Without mentioning these problems, highlight the changes which are going to fix them. Customers past and present will get the message and give the company another chance. Over time, the bad reviews and low ratings will be replaced by descriptions of positive experiences capped off with five stars.
Taking over an existing business with the goal of turning it around always sounds preferable to starting one from scratch. The equipment is there, staff is experienced, and most important of all, the customer base is established. However, the act of taking the reins of a business is not a simple transfer of ownership and tweaking of the wall colors. It requires an understanding of the business and where the previous owners were going wrong. It takes careful deliberation over what to do next, and conservative investments along the way. Make these factors priorities, and there’s a good chance the attempt to turn the business around will prove to be a success.