77 BUSINESS ADVICE Jonathan Jay is an acquisition and business specialist. A published author and mentor with a track record in buying, selling and restructuring companies, he runs The Dealmakers Academy, a training programme which helps others acquire and successfully run businesses, with a focus on commercial success alongside a healthy worklife balance. Email: hello@thedealmakersacademy.com for further information. Building a craft business can take time. Craft is such a personal thing, and business owners are often selling product portfolios that have taken time and care to create, products that fit a brand and have meaning. Expanding that personally developed product range could mean investment - in equipment, property, and new staff – but there are other ways to grow a craft business. Acquisition is a successful route to expansion: buying other craft businesses to add to your portfolio and maximise your audiences. The benefits of buying an existing company are huge – you already have the infrastructure, the customers, the cash flow and the team. So it makes sense, for some, to look at companies that are already out there, instead of beginning from scratch or adding to your own range. The key is to ensure you look at companies that complement your existing offering. Know the market I always advise people to buy a business operating in a sector they already know and understand, which is why growing your craft business by acquiring other craft businesses makes perfect sense. You need to carry out thorough research and diligence: and have some awareness of how the market operates, so staying within your own market is most sensible. There will be a lot of things to learn along the way anyway when buying a new business – the staff, the culture, the reputation – and if you buy in a sector that you’re completely new to, you’re going to have two huge learning curves as you’ll need to learn all about that industry. Don’t make it more complicated or more difficult than it needs to be. Start with the kind of crafts you already know. Think of your brand You have built up customers, you know your audience and they know and trust you. If you’re now growing your company, you need to consider how any acquired businesses will fit into your brand. Ideally, you’re looking for a company that sells complementary products without eating into your existing portfolio. You can then keep that company’s brand and loyal customer base and each business can cross-market. If you acquire a company that creates the same kind of products, you may want to look at absorbing them into your brand. This is fine, but it will be vital that you work with a PR or marketing professional, to ensure this is communicated properly and there’s no customer drop-off. Buy a good team Ensure you secure a company that already has a good solid management structure in place. If not, you’ll end up being part of that management team, looking after the day to day running of the company: and you are not doing this to buy yourself a job. People sell their businesses for different reasons – retirement, health, complete life pivot – but the key is to only buy that business if it can survive without them at the helm. If it is too small, then there is a chance it won’t cope well at first – and then you’re looking at a different path altogether. If the team and structure is strong, a change in ownership means progress, not panic. Finance first Only buy a company you can finance – but never finance it from your own purse. Think of it like buying a house: if you’re told you can’t get a mortgage large enough to cover the repayments on the house you want, that may be a sign you can’t afford it. You do not want to end up out of pocket here, so don’t dip into your life savings. There are many other ways to fund a business. Use the professionals Always engage an accountant to do the due diligence. It sounds obvious but I have come across a lot of people who fancy doing it themselves. This is never a good idea, as you are simply not able to look at it objectively: you’re coming at it from a personal and financial gain point of view and whether you want to or not, this will skew your judgement. Hire someone completely detached, and of course suitably qualified. The same goes for your lawyer: have a good proactive lawyer already in place who can get the deal done without any ego getting in the way. Don’t fall in love Don’t fall in love with the business – this is business! You’re looking for a motivated seller, but don’t become a motivated buyer. The key is to stay detached. Look into at least 20 businesses before deciding which one to buy. Buy that business based on its financials, not your feelings. This is tricky, as craft is quite unique, many people have businesses that are borne out of a love for the activity itself. But if you’re looking to grow your business, you need to stay focused on it as a company. Start with the end in mind Why are you doing this? What is your motivation? For most people, the aim when buying a business is quite simple – to make money. It’s to create a more secure future, one that involves accomplishment and provides security. To take an existing success, add and build to it and make it better. That’s great – I applaud this and have helped hundreds of people do just that. So keep that goal in mind throughout the entire process. If you get too emotionally attached, or too involved in the running of the business, or don’t do the diligence up front, that success becomes compromised. Keep it objective, professional and detached. Buying a business can be the best thing for everyone – it can bring you the success you seek without personal financial risk, it gives the previous owner the departure they are hoping for, and it offers the team better prospects, thanks to the progress you will provide.
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