After buying a business, it is in the new owners’ best interest to start thinking of ways they can add value to the business which can be implemented over time. How you will adding value to a business you intend to buy is one of the questions you need to ask yourself when buying a business.
There is not just one method to add value to a small business that you intend to purchase, there are many. Depending on your business, there are numerous ways to improve the performance and ultimately the profitability of the business.
As the new owner shouldn’t make too many changes too quickly as the transition period can already be a difficult period for employees and changing too much too quickly at once can be confusing and cause the loss of clientele or key employees.
Create or update your website
If the business you purchase does not have a website, it can be a good idea to create a modern website that will help create an online presence for the business. Learn more about why small businesses need a website.
The type of website will depend on the type of business. A service-based business will most likely just need a basic brochure website whilst a retail shop would need an e-commerce website that can process transactions online.
Alternatively, if the website has an outdated website then you can either update it by hiring someone or doing it yourself if you are technical. If you are updating a website, make sure you organise redirects to retain some of the SEO value.
Social media marketing
Create social media accounts if they do not already exist. Leverage advertiser-friendly Pinterest, Facebook, and Instagram, as are the best places to get cheap exposure. You can always pay for ads but it is definitely possible to get free exposure, you just need to get creative.
Not sure why you need to spend time and advertise on social?
For businesses selling a product:
Creating a following on Instagram or Pinterest will be more beneficial as people may purchase something online if they see it on social media. Pinterest can be used to demonstrate how the product is used. Instagram can be used by creating a good tag and getting influencers to create posts that include your product.
For businesses selling a service:
It will take time to create a sizable on social media whether it is your company or personal brand. If you are a service-based industry, it is generally best to leverage your own personal brand to create a following which you can funnel into your services. Think Gary Vaynerchuk, he has a social media marketing company but uses his face to advertise his marketing knowledge and business acumen. People follow him as he is seen as an expert in his field. This in effect makes his business appear more knowledgeable in their field.
If your business sells a product, consider selling on eBay, Amazon, Kogan Marketplace, Etsy, Catch Marketplace as these can help you grow your sales for a fee which is usually around 10% of your sale price. This fee isn’t expensive if you consider the normal costs associated with acquiring a new customer.
Some businesses run very smoothly and some do not. If you have bought a business with the intention to improve it, it may be a good idea to improve the existing processes or implement some of your own if you have experience in the area. It may not be a good idea to boss existing employees around unless you are certain your processes will improve the performance.
Add a new service or product
If you took over a mortgage broker business, it may be a good idea to add additional financial services such as automotive finance, insurance, etc. Regardless of the business industry that you are involved in, there is always an additional income source that can be generated. You just need to think laterally and create a plan to implement the new product or service.
Upsell to customers
The business that you took over may have a database of clients. Use this database to upsell existing clients. For IT companies, this could be as simple as giving them all a call to organise a free consultation session. During the consultation, your business can upsell additional products or services.
Improve customer service
Sometimes, poor customer service may be the reason why the previous business owner sold. Perhaps they were no longer passionate and had started burning bridges with some clients. Implement processes to improve the customer experience if this is the case as this will create more goodwill among the business clientele. Repeat customers are the best customers as they are cheaper for the business (you don’t have to spend money to acquire them).
There are several ways to improve customer service, following up on clients post-sale, sending tracking emails, creating a customer service team, creating a customer loyalty program, improving the warranty or refunds process and of course, just being nicer to customers. Click here to read Surveymonkey’s comprehensive guide on how to improve customer service.
Perhaps the business is so successful that you can expand the business by opening new stores. This is particularly the case for food businesses or some service-based businesses. If the business is located in the Western suburbs of Melbourne, then it may make sense to expand it in the North or East and vice versa.
As stated earlier, it is always a good idea to learn the business and wait a little while before implementing any major changes within the business. As expanding the business can be a costly exercise, it is best to make sure the processes, procedures, and financials all work prior to expanding.
For some businesses, expanding may mean raising funds by getting a business partner or by getting a small business loan from a lender. It is best to speak to your accountant or a commercial broker if you need to go down this route to get an idea of what type of loan to get.
Reduce overhead costs
The business you bought may be paying too much for its utilities. This is especially needed if your business operations are energy-intensive. If your electricity bill runs in the thousands per quarter, a 10% saving can add thousands back into your bottom line.
Repeat this exercise with other recurring expenses where the quality of the service is the same regardless of which company provides the service. You can save money just by researching the pricing of competing electricity billing companies, telecom companies for your phone and internet bills.
Restructure part of business
Is there a department within the business that is making a loss and dragging down the entire business as a result? If so, it may be a good idea to restructure that arm of the business or to close it down so that the business is more profitable. Perhaps the product is no longer selling now due to changing trends or maybe the department’s role can be taken over by utilising technology.
Sublet unutilised office space
Is there a lot of empty space in the property which your business leases or owns that could be sublet to another tenant? If so, this under-utilised space can be sublet to another business. This is quite common practice and is a good way for a business to reduce its overheads.
When buying a business, it is better if you can find one which is undervalued and in a position where you as the new business owner can add value and increase the overall profitability. There are numerous ways to do so and since each business is different, you will need to think outside the box in creating a plan to add value.