So you’ve bought or are buying an SME business?
Here are 3 things to consider that will make your transition smoother and more successful.
1 – Post-acquisition challenges and must do’s
Employees:
They may experience anxiety or stress related to the news about a sale. Be clear and specific in communicating your vision, let them know how much you value their loyalty and how they are crucial contributors to the business success.
Customers:
They may feel uncertain about the change in ownership and how it could impact their business. Focus on building relationships as early as possible with your key customers. Communicate your vision and commitment to a customer-focused offering.
Operations:
Operational stability is essential as you begin to learn all there is to know about your new business. Schedule regular check-ins with core team members and get to grips with the key metrics that drive operational effectiveness.
Systems:
Knowing which systems are core to your team, customers and operations will help you to optimize for efficiency, accuracy, and automation. Well run systems give you peace of mind and are a catalyst to achieving sustainable growth.
2 – Buying as a full-time owner-managed business
Operations:
When intending to be an owner-managed business, get exposure to all operational areas as soon as possible. You will learn, and come to appreciate, what it takes to successfully deliver your products/services.
Management:
Being in your business daily means you will interact often with your new team. Focus on building trust by being genuinely interested in learning what makes each person tick. This will go a long way to forging solid relationships and creating an environment people want to work in. You may also find your team will help carry you through times when you feel overwhelmed by all the new responsibilities.
3 – Buying as part of a roll-up into your existing business
People:
Integrating people from your new acquisition into your existing business has many challenges. Consider the culture of each team when communicating how you intend to blend the operations.
Technologies:
Evaluate and objectively rank the technologies used in each operation. Some may need to remain independent, while others may require integration or complete replacement. Prevent ‘ownership’ disagreements by setting out a clear scoring matrix for the value each technology brings to the business. Typical metrics to consider include total ownership costs, operational efficiencies, data automation, customer service, sales enablement, and management reporting.
Leadership:
Effective leadership during integration is crucial to its success. Identify the strengths each manager can offer in the process and observe how your team responds to their leadership. This can also highlight opportunities in succession planning for those managers wanting to take on greater responsibilities.
Processes:
Having great people and amazing technologies is an asset to any business. Defining the most effective processes that leverage these assets is your key to sustainable growth. Each operation has its way of doing business, so attempt to harness the best attributes from both and build out a new set of processes that reduce constraints and support expansion.
Bonus Item – Think like an investor
Your Exit:
Thinking like an investor requires that you also think about your future exit from this business. Identifying an ideal buyer will help you build and position your business as an attractive addition to its portfolio. An ideal acquirer will likely be 5-20 times larger in annual revenue than your business.
Build Value:
You’ve identified things in your new business that you can improve and/or grow to achieve greater success. Be intentional about the value you intend to create and you can achieve exceptional returns on your investment. Focus on building s rock-solid balance sheet that tells a great story to prospective buyers.
Dependency:
Businesses with the least dependency on their owner received higher multiples when it comes to acquisition offers. Other buyers also think like investors, and they desire businesses that are ready for a change in ownership and can continue operating effectively without impacting current revenues and profits.
Buying and building an SME business can lead to tremendous value and wealth creation. Following these items will make the transition smoother and set you up for success.
