How to Run a Business You Didn't Start

While buying an existing business brings plenty of perks, like starting off with an established customer base and existing employees, it’s not without its struggles. You’ll have a steep learning curve ahead of you, and without a game plan, you run the risk of losing money before you find your footing.

Let’s explore some lessons you’ll need to learn before buying an existing business.

Lesson 1: Learn the Culture Before Trying to Change It

You come in with all kinds of ideas about how you can improve this business. But before you demolish it (even figuratively), take a pause. There are likely several aspects of the business that are working, and trying to change so much all at once will inevitably result in disaster.

This business has a culture. How the employees interact with one another, how they work with clients, all of this is something you need to carefully study before deciding whether to change it or not.

Here’s an example. You’re buying a B2B company, and right now, 90% of the staff work remotely most of the week. Your initial thought is to require everyone to work in the office full-time. However, you might not be aware of the fact that several key employees live a substantial distance from the office. Requiring them to work in the office might force them to quit, which means you lose some of your best allies before you even begin.

Speaking of employees, they’re understandably going to be wary of you for the first few months. They’ll be afraid that you will change the things they love about the business. Instead, try listening. Ask them what they’d like to see change, and what works. Having that insider perspective is worth its weight in gold.

Lesson 2: An Operational Audit Will Take You Far 

You reviewed the business’s financials during your due diligence, but now it’s time to dive even deeper, both into the financials as well as processes, workflows, and documentation.

Start with the numbers. You want to understand which products or services generate the most revenue, as well as those that produce the least (you may want to trim these, but wait for now).

Look at profit margins and costs. Create a budget for any expenses you want to undertake, and determine the timeline to make those purchases.

Now, look at all existing processes and workflows. Talk with employees to understand where the bottlenecks are. If you bring expertise that can help streamline any of these workflows, talk to those who would be involved in changing over to the new processes and/or technology to get their buy-in.

Essentially, you want to understand everything about how this business operates before fixing what isn’t broken.

Lesson 3: Know Thy Customer

As important, if not more so, as understanding the intricate workings of your new business is understanding your new customers. Sit down with sales and marketing personnel to get to know:

• Customer demographics
• Where the business markets to them
• Customer segmentation
• Customer lifetime value
• Customer churn rate

Next, read your online reviews and then talk to actual customers. If you’ve purchased a store, get on the floor and chat with real, live people. If your customers are all over the country, send emails or make calls. Pinpoint exactly what you want to know. How do they find the business’s customer service? Prices? Quality of product? What, if anything, would they change?

Then, take this customer feedback to heart. Use it when reconstructing your marketing plan, as well as making changes to customer service and/or product design and quality.

Lesson 4: Leverage the Previous Owner’s Experience

Before the owner you purchased the business from sets off for a permanent vacation around the world, ask her to stay on board for a bit. They can be a huge help both in showing you the ropes as well as smoothing over employees’ ruffled feathers.

When negotiating the sale, consider including a clause about keeping the owner on during a transition period or as a part-time consultant.

This is especially important if you’ve purchased a business that requires a high degree of specialized knowledge that only that business owner has, or if that owner has personal relationships with clients. By introducing you to key clients, the past owner can pave the way for you to create your own relationships with them.

Lesson 5: Be the Leader, Not Just the Boss

We touched on your new employees, but it’s time to put even more focus on them. Your new staff is looking for stability and vision after the uncertainty of the sale. This is the time to establish your leadership and communicate a clear direction.

We talked about the importance of listening to understand what your employees need, but it’s also important to communicate clearly what you expect from them as the new leader. Always aim for transparency; naturally, there are going to be a lot of shifts, and each one may cause a wave of panic. You can mitigate the confusion and stress by explaining why each change is necessary. For example, if you are streamlining a process, explain that it will save time and allow the team to focus on higher-value work. 

It may be helpful to connect with a few key employees to act as your champions. Giving them small projects they can easily complete builds their confidence in you, and this is transmitted to the rest of the team.

And don’t forget positive feedback! You want to be the kind of business owner that people love working for, so pay attention to their hard work and praise them for it.

Final Thought

In buying a business you didn’t start, you inherit both the good and the bad. Over time, you will change things and leave your own mark on the business, but in the beginning, just be. Listen. Pay attention. And take notes. Once you truly understand the dynamics of this company, you can make changes that will benefit you, your employees, and your customers.