Tips for a smooth transition when taking over a business

When you buy a business, a smooth transition should be one of your priorities. After all, you will have plenty to do already. It is also important for retaining customers and staff. Here are 10 tips for making a smooth transition.

-- Have the previous owner stay on after the sale to serve as an adviser or consultant for a predetermined period of time. This can add some much-needed stability during the transition period. -- Start with minor changes. Customers may react unfavorably to sweeping changes. Make minor changes and pay attention to your customers' initial reactions.

-- Meet your employees. If you are buying a small business, take the time to sit down with the people who work for the company.

-- Pay close attention to the morale of the employees. It's inevitable that some will be worried about job security. Do whatever you can to maintain and even boost morale.

-- Ask lots of questions and take notes. Let the previous owner and the staff teach you how to run the business. Before you implement procedures, make sure you know how things are currently done. Only then can you make informed decisions on changing business procedures.

-- Maintain record-keeping procedures. It's important to keep the paper trail in place. Do your best to ensure that employee records, purchasing policies, invoices, payroll, taxes and other paperwork remain on schedule.

-- Review customer service policies. Customers are used to having things done in a certain manner. Review the policies and maintain them for the first few months. After the transition is complete, amend them as necessary.

-- Meet the vendors. If the business is large and there are many vendors, you may not be able to meet everyone. However, interview the seller about each vendor and try to contact all of them.

-- Familiarize yourself with technology. While meeting the people and learning the procedures is important, you must also learn as much as you can about the technology behind the business. You need to get to know the software programs their shortcomings. Learn how the technical staff (or individual) has handled problems.

-- Do something nice for your customers. Once you are comfortable running the business, have a promotional giveaway or do something special for your customers. This will help create good will.

The most important thing during the transition is that business continues to operate without significant interruption. You want your regular customers to feel comfortable. Most people resist change, so don't make any sweeping changes unless the business is struggling and desperately needs new customers.

-------------------------------------------------------------------------------- Avoid pitfalls A smooth transition can be foiled by the following:

-- Undisclosed debts

-- Pending lawsuits

-- Poor employee morale

-- Overvalued inventory

-- Tax liabilities

-- Outstanding tax audits and bills

Negotiate a favorable contract

Not unlike buying a home, you will need to negotiate details regarding the acquisition of a company.

From physical concerns about the property, to assets and intellectual property such as trademarks, stock and outstanding bills, you need to define in the contract who is responsible in each area and exactly when and how the responsibility shifts from the seller to you as the buyer.

Your best bet is to hire a corporate lawyer and an accountant to help you through the process.

AllBusiness.com provides information about products and services for entrepreneurs, small businesses and professionals to start, manage, finance and build a business. Visit www.allbusiness.com.

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