So you found the perfect company to buy! That’s great, but are you going to sleep at night? Here are a few strategic planning tips you should consider when buying a company:
- Do your due diligence. Investigate the trends of Accounts Receivables, Cash, Accounts Payables, Officer Loans, Sales, and Cost of Goods Sold over five years. The trends will tell you a lot about the past, present, and possibly the future of a company. If these trends look bad, ask the hard questions, and demand support for their responses.
- Create a Strategic Plan. Most new owners do not know what this means. The main point is to visualize where your company is in relation to its industry and where you want it to be. The strategic plan will include your internal strengths and weakness. Be honest and don’t look at the business through rose-colored glasses. An honest strategic plan before you buy the business can alert you of business aspects that you overlooked.
- Plan for technology. Technology can help you monitor your strategic plan. Along with your budgeting plan, strategic plans have benchmarks that a company wants to meet. Use technology as a “thermometer” of your business health. A few troubling metrics can signal a bigger problem down the road. Also, how will social networking and search engine optomization help you in achieving your goals?
- Cash is king. Always capitalize your company adequately and properly. Sometimes the best capitalized companies are those who squander their resources, while the poorest companies may have the best ideas but no capital to get there. Again, your strategic plan along with your maketing and budget plans should give you an honest idea of what it will cost to finance your company. Many feel that once you arrived at that number, multiply it by three because your sales will usually lag behind your estimates for a lot longer than you think.
- Consult experts: There are many forms of strategic planning. If you have a good grasp of you industry, you can solicit the help of a strategist and business plan professional to help you organize the plan. Never venture out in a new direction without professional help. A couple of hours of consulting with a CPA or an attorney can save the business down the line.