Every day, entrepreneurs purchase or start businesses and plan to succeed in their endeavors. While many do, others don’t, as they fail to explore all the elements that make a business prosper. If you’re considering purchasing a business, it’s important to understand there are a few generally accepted strategies owners can employ to succeed in their new business ventures. Here are seven tactics to consider as universal keys to a profitable business.
1.) Work With Experts.
Purchasing a business requires working with experts. A business broker understands the ins and outs of buying various types of businesses and is the first expert a prospective business buyer should contact. However, enlisting the help of an attorney and an accountant should be musts for anyone purchasing or starting a business.
Since the vast majority of people buying a business have little or no background in handling that type of transaction, moving forward without expert advice is virtually assured to be costly. Bankers, attorneys, and accountants work with business buyers to evaluate the pros and cons of a purchase to maximize the potential for business success.
2.) Plan, Plan, Plan.
Before investing in any business, creating a viable plan, or map, is crucial. It’s virtually impossible to succeed without developing a workable business map that outlines where you are and where you want to be in the future. That includes setting realistic, measurable objectives for both the short and long term.
However, even business plans that appear solid may not work out. That doesn’t mean those plans weren’t viable when they were created. Things no one could foresee happen all the time. For example, the pandemic created multiple issues business plans simply didn’t anticipate. That’s why comprehensive business plans include options to put in place if or when the expected conditions change. Frequently reviewing business plans makes it easier to identify conditions requiring updating the plan.
3.) Evaluate Both Risks and Benefits When Buying a Company.
Owning a business always includes a variety of risks. Understand the risks involved when purchasing an existing company or opening a new one. That’s not always easy, but failing to grasp the pros and cons of a business opportunity may lead to some unfortunate surprises later.
Understanding your own willingness to take risks is a big part of determining whether a specific business opportunity is a good fit for your needs. If your tolerance for risk is low, avoid purchasing a business that requires a great deal of risk. Stick to proven businesses that may yield lower returns but offer more security.
4.) Focus Your Efforts on Retaining Existing Clients.
Even though attracting new customers is always important, remember that far more effort is required to attract new customers than to retain existing ones. That means do everything possible to keep current customers happy when purchasing a business. Go the extra mile to make sure all customers enjoy the service they expect.
Growing a company is a common goal, but that growth depends, to some extent, on current customers ordering more goods or contracting for additional services. Those solid, dependable clients form the backbone of a company, so take the time to track the behaviors of existing clients to ensure you’re providing a level of service required to keep them coming back. If you’re purchasing an existing company, focus closely on a smooth ownership transition that existing customers won’t even notice.
5.) Understand the Era You’re In.
Far too often, entrepreneurs purchase a business without considering that today’s customers are far different than those commonly seen in the past. The way people purchase goods and services is vastly different than business owners routinely expected even ten years ago. That means going into a new business requires a willingness to adapt to new ideas and marketing strategies.
Even though brick-and-mortar stores still dominate the landscape, online businesses are growing at astounding rates. That fact suggests all business owners must consider having an online presence and investing in a quality website. At the same time, understanding the role social media sites play in marketing is a must, as those platforms are increasingly viewed as the marketplaces of the future.
6.) Pay Close Attention to Hiring the Best Employees.
When purchasing an existing company, the sellers may already have reliable employees in place. However, evaluating those employees yourself is crucial, as not all current employees may share your vision for the company’s future. While keeping outstanding employees is a good idea, don’t retain employees who won’t be beneficial in achieving your objectives for the organization.
When hiring new employees, take the time to check their backgrounds carefully. While recruiting top employees isn’t always easy, look for workers who are willing to try new ideas and think outside the box, as the way a company functions will evolve rapidly. That means everyone must adapt as market conditions change.
7.) Track Your Company’s Progress.
To be profitable, companies must routinely evaluate their performance. If you’re willing to track your organization’s progress (or lack thereof), you’re far more likely to enjoy increased profits in the future. Performance tracking at all levels of the business enables an owner to identify weak areas and develop strategies for improvement. Even areas where employees are performing at high levels can improve, so never sit back and be satisfied with the existing performance levels. Look for new and innovative ways to improve.
In most instances, involving employees in the evaluation process will provide valuable insights into the way a business functions. Be willing to listen to suggestions and reward solid input from others.
The Future Starts Now
When buying a business, always understand that things will change. Some changes will be internal and controllable, but others are external and beyond your control. Being willing to adapt to change will make the difference between succeeding and failing, so focus on ways to take advantage of new demands as they occur rather than fighting them.
Evolution is constant, which means focusing on the future is always vitally important when buying a business. Your future starts today, and that means moving forward with buying that new business now rather than later. Use the universal keys to a profitable business to your advantage. For more information about purchasing a business, contact a business broker today.
