Hindrances to Purchasing an Ongoing Business
One of the ways of owning a business is by buying an existing one. However, an on-going business may harbour several limitations and a prospective buyer should do well to be mindful of these limiting factors. Some of the limitations are discussed below.
Uncommitted and Inexperienced Employees
A business faces serious threats if it is being because managed by inexperienced and incompetent hands. This tells us that for a business to grow, its workers must be committed and diligent in their deliverability. So, before going to acquire an existing business, ensure to carry a survey on the quality of the workers there else you might just be running into a big problem.
Note that, the business will derive the full benefit of inheriting existing employees only if they show continued commitment to the business and loyalty to the new owner. But where the loyalty and committment of the experienced employees is missing, their presence in the business could be a disadvantage.
Another limitation is the nature of customers'loyalty. One critical determinant of a business' profitablity is tge customers'patronage. On this premise, it is not enough to know that a business is profitable but it is also necessary to know the constituent variables responsible for the profitablity. Thus, the buyer of an ongoing business should therefore seek to know the extent to which existing success is being tied to the personal relationship between customers and the owner of the business.
Knowing this will throw more light on the magnitude of what needs to be done to sustain or even go above the existing performance level or profit yield of the business. It will equally guide the pattern of negotiation between the buyer and the seller. What this means is that as one intends to buy an existing business, such person should be prepared to maintain the relationship the previous owner had with his customers to avoid losing patronage.
So, it is not just enough to buy a business because it is successful. Be prepared to work at maintaining that success rate.
hi @tomlee
Buying a business that is successful does not necessarily mean that it will remain so. As you say, you have to know the business and all the nuances. The relationship of employees with each other, with suppliers if that's the case, there are many things to consider.
Hello friend good advice, to undertake any action we need a diagnosis that allows us to make the most accurate decision. It is a very good point that you mention about the commitment of employees to the company, since they are the fundamental engine for the productive activities of the company. So long, my friend, have a great week! 🤝
Good article, one of the things I like the least about Latin countries is that in these countries the businesses for sale are those that no longer make a profit, the owners usually become sentimentally attached to their businesses.
Although it is really difficult to find loyal employees these days, most employees are basically concerned about the salary and that is the end but the few ones found are truly great assets to the company.
Hi @tomlee
acquiring a business requires having a large planning and studying all aspects should be investigated to carry everything forward and maintain good relations with clients and emp
Solid points! Before buying a business one must surely watch out for this points to avoid buying a failed project.
Dear @tomlee
I've noticed that you do not really take time to reply to comments :(
For that reason I'm forced to reduce PH support to your content.
Yours,
Piotr
Okay.