How to Take Over a Small Business
Small businesses change hands due to a number of reasons, including retirement, failing health and a desire to reduce the number of hours committed to working each week. Formal small-business purchase procedures include meeting state real estate codes and legal requirements, but when the escrow closes, the process of taking over a small business continues as the new owner reorganizes operations and shifts practices to meet the new goals and standards.
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Instructions
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Contact your state and county governments to obtain new licenses, any permits and transfer business memberships for the new company. The new business owner must obtain licenses and permits in the owner's name, even when the business name remains the same. State, county and local licenses all require completion of transfer paperwork listing the new owner or new corporation. Local business memberships, including the chamber of commerce and business neighborhood associations, provide a method to network with the community and joining or renewing these memberships show your professionalism.
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Conduct a complete inventory of the small business immediately when escrow closes. Even when the former owner submits a formal inventory as part of the closing or settlement sheet in escrow, a new inventory provides a review of the products corresponding with your new business plan. Donate or sell any items in the small business not aligning with your sales goals and then complete Internal Revenue Form 8594 to itemize your business asset acquisitions for federal income taxes.
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Develop a company mission statement and business plan for the small business and write an employee handbook listing official standards and rules for business operations. This document highlights any differences between the new and old company policies making it clear to older staff, if any, the current company policies and procedures. If the business hires new staff, the handbook provides clear guidelines for company procedures and methods for operation.
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Retain, hire and train staff members and employees. Meet with staff to determine employees matching your business plan and interview new staff for any new openings. Review salaries and benefits, and conduct a training session incorporating your business mission plan and rules and regulations outlined in the employee handbook. Have staff sign formal federal and state tax paperwork and a written statement of understanding and confirmation that each member received a printed copy of the handbook. Train new members for their job duties, and review any job changes for staff held over from the former owner.
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Introduce yourself to old business clients, and develop a marketing approach to attract new customers. Avoid automatically advertising "Under New Ownership" for a successful business. Clients enjoying the service of the old company need assurance that it's the quality business offered by the former owners. When the former firm offered substandard services and you're out to attract new business based on new practices, put out the "New Ownership" signs and advertising as a bold statement for disgruntled customers to give your firm a second chance under your new business plan.
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Tips & Warnings
Make sure the owner doesn't have any relatives who are viable candidates for taking over the business. Discuss this possibility before your apprenticeship to avoid having your hard work lead nowhere.
References
- "Indianapolis Business Journal"; Small Businesses Changing Hands Despite Recession; Peter Schnitzler; November 2009
- SBA.gov: Employment Law Forms
- SBA.gov: Obtaining Business Licenses & Permits
- SBA.gov: Five Steps to Registering Your Business
- SBA.gov: Doing Due Diligence
- SBA.gov: Checklist for Closing on a Business
Resources
- Photo Credit morguefile.com
