By Brady Baker, BackFromBurnout.Net
Guest Columnist
Image Source: Pexels
For entrepreneurs looking to expand their portfolio, starting a business from scratch isn’t the only option on the table. Purchasing an existing business is a great way to take advantage of an established brand and infrastructure. But, before investing, it is important to understand why the business is currently struggling which could involve poor financials, outdated technology, etc. In this article by Seismic, we’ll explore the steps entrepreneurs should follow when purchasing a new business and how to turn things around.
Research Business Listings
There are various reputed websites such as BizBuySell, BusinessMart.com, and more where you can find businesses for sale, as reported by Business News Daily. Additionally, reach out to business owners in your network who you feel may be willing to sell their business or may know others who are currently in the market for buyers. Create a budget and refine your search based on the size and industry you’re interested in.
Do Your Due Diligence
Once you have contacted a seller and expressed your intention to buy, it is important to conduct due diligence before making a formal offer. This will involve:
- Reviewing the business’s gross income for at least the past three years.
- Learning about all outstanding debts and liens.
- Understanding monthly overhead expenses.
- Reviewing all contracts the business has entered with other parties and how it can impact its future.
- Calculating the financial investment you’ll need to make to help the business overcome current barriers and become profitable.
Make an Offer
Based on your research and calculations if you are satisfied that the investment will be worthwhile, make an offer to the seller. As reported by Chron, often this process will involve one or more rounds of negotiations until both parties agree on a favorable number. During closing, you may need to sign a bill of sale and a security lien agreement. If you aren’t familiar with closing proceedings, it’s best to hire an attorney to handle these tasks.
Adopt a Stable Business Structure
One of the first steps you should take post-purchase is to establish the business as a limited liability company (LLC). As the new owner, running the business as a sole proprietor will mean that your assets and finances could be used to pay off debts and liens in case of disputes. An LLC will protect you from business-related debts and provide various tax benefits which can help to save hundreds if not thousands of dollars a year.
Practice Business Process Management (BPM)
Replacing old, inefficient business processes will be key to turning things around. The best way to set new, effective processes will be to use business process management. Utilizing the power of AI, BPM analyzes current business processes and creates a master workflow. Furthermore, it highlights areas where processes can be made efficient through automation or the introduction of new business practices. These insights can be used to make organization-wide changes to help all teams achieve higher productivity and easier collaboration. If you’ve never used this BPM before, here’s an option for your BPM flow.
Additionally, given that BPM consistently analyzes processes in real-time, it makes it easy to track the effectiveness of changes and make informed business decisions.
Invest Heavily in Digital Marketing
Whether the business is in the B2B or B2C space, having a strong digital presence will play a key role in its success and are some of the best ways to achieve this goal:
- Design an aesthetic and functional business website that is adaptive to all mediums (e.g., laptops, smartphones, tablets).
- Create accounts on all major social media platforms and regularly post content to develop brand awareness.
- Use an online tool to create eye-catching banners for your website homepage and all social media handles. Having a well-designed banner helps to make a great first impression and prompts customers to take the desired action.
Converting a struggling business into a profitable one won’t be easy. But, by establishing an LLC and utilizing technology solutions such as business process management, you’ll be able to overcome existing inefficiencies and set it on the path to success.