Sunday, May 15, 2011

First 100 Days of Business Ownership

Part of a business broker’s job is to not only help a buyer find a business, but help them manage their time once they have the keys to the front door. And what those new businesses owners quickly realize is that those first few months of business ownership are both challenging and critical.

That’s why it’s essential new owners quickly put together a solid plan for those first 100 days. It would be unrealistic to determine your success or failure based on that period of time, but if you don't plan properly, you will have a very bumpy start to life as a business owner.
There are seven critical steps to help you learn the ropes of your new business. Some will be obvious as you look through this list, but with so much on your plate as you become a business owner, it's easy to overlook the obvious.

1. Meet with your key employees. Indeed, meet with everyone on your payroll but prioritize those who are most important to the success of your business. The key reason is to put these people at ease over the ownership transition. There is a lot of anxiety at this stage and, most likely, the new owner is worried that the key employees may leave while the key employees are uncertain about their futures. In most cases, everyone wants and needs to maintain a status quo and the sooner you communicate that to the employees and develop a relationship the sooner you can put your imprint on the business.
Also, make it a point to talk to the mid- and low-level employees. They need reassurance as well, but more critically to your success, these workers may be sitting on a ton of good ideas they are anxious to share if someone just asked. Welcome their input. I'll bet you'll get many ideas.

2. Meet with key customers. A business doesn't survive without customers. That's true for the storefront bakery and the parts manufacturer for a steel producer. Prioritize your most valuable customers. Who are the largest and most profitable clients? Who buys the most widgets? Ask what you can do better to retain their trust. Also, ask your employees if there have been key customer losses in recent months. Meet with those customers and ask what you can do to earn their trust again.
Don't forget the smaller customers. With proper care and nurturing, they can become your biggest spenders--and your biggest advocates. Consider appointing a go-getter employee with a new task: customer service rep for small and mid-sized accounts. Perhaps add an incentive for that employee if he or she brings in more business from those existing customers.

3. Meet with key suppliers. New ownership can be a blessing or a curse for suppliers. A blessing, of course, if there were payment issues with past ownership. A curse, perhaps, if they were paid on time with the old owner. They want to make sure that will continue. In either case, you need to spell out your plans to your suppliers on how will manage the business. These are your partners. Listen to them. Consult with them. They can help you succeed--or fail.
Of course, there could be big issues that need to be addressed. Perhaps one key supplier doesn't understand the concept of a deadline, or the products you have been receiving are of dubious quality. Manage these issues, and, if necessary, be prepared to make a change before you meet with problem suppliers.

4. Get on top of the accounting. Organize, organize, organize. Know who you are paying and why. Know how much you are spending and why. Who's paying you on time and who's not? These are all concerns you need to examine routinely. You need to identify problems but more important, you need to understand the process of how your records are kept.
You may want to change how the books are done if you're not satisfied with the process. If you have a knack for numbers, consider bringing the basic accounting in house. If you don't, use your network to find a trusted accountant. Typically, a new owner can save dollars through a simple financial review. Multiple small savings can really add up and drop immediate dollars to the bottom line.

5. Get hands-on experience with the business. If you're running a small business, this is probably the first thing you will do simply because cash flow dictates you do much of the work. But if the business is larger than a storefront, you want to get hands-on experience in all aspects of the business. This won't make you an expert in marketing or customer service, for example, but it will give you a better understanding of the processes involved. Also, if you detect a problem in marketing, for example, you will have better understanding of what you should be asking to fix that problem.
Also, having your employees seeing you on the job accomplishes two critical functions: First, it can be a morale booster to see the boss in the trenches. Second, it puts employees on alert that you're paying attention to what they are doing. That can reduce laziness and theft.

6. Create an issues list. This is an ongoing task. As you work your way around the business--talking to your employees, customers, suppliers and understanding how each department works--you'll start to encounter issues that need to be addressed. Rank these by importance. For example, if you know you have a key manager who's a little too friendly with a competing business you'll want to put that high on your list. Does a key supplier deliver certain perishable items--cheese, fish or meat--too late in the day?
As you rank your issues, you can develop an action plan. That will help with the final step.

7. Refine your business plan. Now it's time to take everything you have learned and determine how to optimize your opportunities. What needs the most attention? Where can your unique skills be most useful to growth? What aspects of the business can I trust to certain employees?
I strongly recommend you don't refine your business plan until you carefully and critically look at the business you just bought. Don't rush into changes on Day 1; waiting 100 days will lead to wiser decisions.

Your patience will pay off in the long run.

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