Many entrepreneurs starting a small business are looking for quick growth and increased profits. One of the most accepted ways to induce this kind of growth is the act of acquiring other businesses. While this can be an effective tactic if done correctly there can be major pitfalls that can cause a business acquisition to backfire. Following these 3 tips for startup businesses will help you avoid these pitfalls and make the most out of your small business.
3 Tips For Startup Businesses – Do Your Due Diligence
When deciding to acquire a business, make sure that you do your due diligence. First, you should learn about their product. What is it? How can it benefit your business? Is it reliable? Next, you should make sure that the accounting is solid. Sometimes, businesses may have off the book expenses that could turn a profitable deal into a major loss. Make sure that there is no illegal accounting or written off expenses, and ensure that the business you are acquiring is as good as it says it is. (People are quick to compliment themselves – check if they’re legit or full of hot air.)
The Customer Is Always Right
Now, you should talk to some major customers or clients. Are they happy with where the business has been going? Are they planning on continuing to use the product? If you find out that customers are not satisfied with the product of the business you are acquiring, you might want to think twice about going through with the buyout. Conversely, if you find that all of the customers are satisfied and will continue to use the product, you probably have a good company on your hands.
Get To Know The Management Team
Good businesses don’t run themselves – there are workers behind every solid company. When you acquire a business, you want to do everything you can to keep the management team on board. This works similarly to talking to the customers. If you find that the employees do not have faith in their business and are planning on leaving to start their own company or work elsewhere, you should look for internal issues with the business. Also, if the top managers are deciding to leave the company, you will need to consider hiring more hands to keep your new customers happy. This can be done, but try your best to keep the old management team on board. After all, if the numbers are good and the customers are happy, they must have been doing something right.