Mark Mills is a serial entrepreneur who has founded and sold several of his own businesses, including Cardpoint PLC, the cashpoint company. Mills is now one of Britain’s foremost business brokers and claims he can sell any business. He also acts as a non-executive director for a number of companies.
Those who are willing to take the plunge and start a business from scratch are often those who are truly passionate about what they’re doing and are willing to put everything at stake for an idea in which they have absolute faith. Someone might have received a less than expected level of service somewhere repeatedly and simply decided that they could provide that service better.
Entrepreneurs are generally people who will do something for passion. They are aware there will be a period of hard work before the company is up and running and are prepared to give all their time to this, with no guarantees at the end of it. This requires a level of dedication unprecedented in normal working life. They’re not simply doing it to ‘make a living.’ If they were there would be much easier routes and I think people who start a business these days start it less for reasons of capital value and more because they want to start something great. People buying into a pre-existing business are more focused on what they are going to make out of it.
If you buy an existing company then you know there is already some momentum behind it and the brand may have already accumulated value.
Buying someone else’s company means there are already certain processes in place, there are already customers and suppliers. These factors can be used to help propel the company forward. Buying someone else’s business comes with some security but also means that you have less control as you haven’t been there since the beginning. You also will not be aware of everything that took place before you were on the scene, nor will you know who has been disenfranchised along the way.
You may have thought that there would be a big opportunity somewhere only to realise once you actually get in the business that the previous owner fell out with the other party a couple of years ago and they have sworn never to do business with the company again. If you’re buying an existing business there has to be a lot of due diligence, not just over the numbers but also over the finer details, such as checking the position of every stakeholder, from the landlord to the staff, the customers and suppliers. If you decide to buy a business, I would always be sure to meet with members of staff before parting with any money and ask ‘If you were the boss what would you do differently?’ This is a great way to find key ways in which the company can move forward. It also shows your staff that you will be the kind of boss who listens to them.
A buyer will always face the challenge of getting the staff on side. This can be particularly obvious in a small business where the staff generally feel loyalty to the founder. The new owner may be charismatic but change will always make people feel anxious. You have to set people’s expectations and reassure them that they are still in a job and that you have bought the business in order to carry it on and expand it. This should make your workforce feel positive about the change.
Key members of staff must be kept in the loop as you don’t want those intrinsic to the organisation to leave. You must make it clear from the outset that they are valued. You may also have to be the first person to arrive in the office and the last person to leave for a while to prove your dedication.
Attention to detail is crucial. If you start from scratch, from day one you can network and position the brand in a way that you believe to be beneficial. You are in a position to produce a mission statement and your intentions are included and reflected in the identity of the company from the outset.
Funding can be tricky in any new business situation, despite all the rhetoric from the government the funds don’t seem to be flowing down to small businesses. Invariably most business start-ups are under-capitalised and under-funded. Orders may come in when you simply don’t have the money to buy supplies to sell. Only hard work and dogged determination can overcome this.
If you’re buying a business you may be able to overcome certain financial hurdles by seeing if the vendor will part-fund your purchase by leaving some money in as a loan. This will bridge the equity gap that they may want and that you can raise over time. There is more of a process in place for raising funds for the acquisition of a business but there are more people to convince of the merits of your acquiring that business.
Start-Ups do still have to persuade people to invest in their ideas though, with private equity groups playing a numbers game regarding how many companies they see and then eventually invest in. The process of doing presentations will enhance your ability to run a business because potential investors tend to ask you the questions that are relevant to the success of the business. With every no you come closer to a yes. The process will definitely make you stronger. Whether buying or starting a business you have to be a salesman.
