4 Things New Owners Face After Buying an Operating Business

Purchasing an operating business has its advantages. You have an existing customer base, existing employees, and likely existing inventory as well. 

However, as experienced business brokers can tell you, purchasing an operating business comes with its challenges, too. Here’s a look at some of the difficulties you may face right after buying an established company.

1. Assessing Current Employees

Sometimes, purchasing a business with an existing team of employees can be advantageous. They already understand how the business works and can perform daily duties, which means you don’t have to invest time and money into recruitment and training.

However, it’s essential that you evaluate the current team to determine whether the existing employees are good for the business. If your team includes unmotivated employees or those who seem to go against the grain of the culture you’re trying to create, you may be better off dismissing them.

Evaluating the current team can also help you decide whether you need to hire more people to support growing operations. In some cases, you may also determine that you need to downsize.

2. Evaluating Efficiency

Even the most successful businesses can stand to become more efficient. One of the best things you can do right after buying an existing business is to conduct a thorough efficiency audit. The sooner you can start optimizing, the sooner you’re likely to see reduced expenditures and increased profits.

You also may want to track efficiency and growth moving forward. You can often accomplish this by looking at financial records or by periodically using a business valuation calculator to see whether your company’s total value has gone up.

3. Evaluating (and Maybe Overhauling) Technology

Some established businesses may not have updated the technology they’ve used in years. More often than not, updating technology can save you time and money. For example, a lot of newer tech allows you to automate payroll, customer notifications, and other functions. 

Of course, incorporating new technology might come with an upfront cost. You can end up paying more in terms of both the money it costs to purchase the tech and the time it takes to train your employees to use it.

4. Evaluating Business Relationships

In addition to other aspects of the existing business, you must also evaluate your relationships with vendors, suppliers, and other companies you may do business with. It’s particularly important to look at competitors to ensure you’re getting quality products for the best price. 

Keeping the same partnerships might seem easier. However, if you can find a better deal elsewhere, it’s worth the effort to make a transition.

Buying an Operating Business Can Be Challenging — but Worth It

When you buy an existing business, you have the opportunity to assess it and optimize it accordingly. However, implementing the necessary changes is often more complex than it sounds. The good news is that when you work with experienced business brokers, they can advise you on how to best move forward once the deal is finalized.