Welcome to our second episode of our “Zoomcasts Business Pains” where we will be inviting experts to discuss various aspects of common business pains, what they are and how we can make them better!
Hello, I am Maria Pombo and I am the founder and one of the consultants at Better Business at Hand and today we are delighted to introduced you to one of our Consultants, a former business owner, Company Director and super experienced business advisor David Peddy.
In this Episode you will discover:
1. The 3 main pain points to watch for when buying a business
2. The 3 most important things business owners need to do before agreeing to buy
3. And David’s one word of wisdom – PLANNING!
One post recording apologies and correction – in this video (I was nervous as usual) and on my comment on the 7Ps rule I got a little muddled so the correct form used for the 7Ps rule to remember (which obviously I didn’t at the time of recording!) is Prior Proper Planning Prevents Piss Poor Performance! 🙂
I hope those listening or watching have enjoyed this short on business pains and found it useful! As always, every business pain has its own difficulties but we are here to serve … You can book David or one of our consultants from our Meet the Team page in our website if you need a hand with a particular business pain.
Our website is www.betterbusinessathand.app Or Stay Tuned by subscribing and checking our YouTube Channel for more shorts on business pains and how to make them better.
You can also follow us on Instagram, LinkedIn and Twitter, were we share handy tips and updates regularly.
Episode 2 Transcript
– MP: Welcome to the second of our series on zoom cast business pains where we’ll be inviting experts to discuss various aspects of common business pains. What are they, how we can make them better? Hello, I am Maria Pombo. I am PRC[…] the founder and one of the consultants at Better Business at Hand. And today we are delighted to introduce you to our colleague consultant, a former business owner, company director and a super experienced business advisor, David Peddy. Hi David. Welcome. And a huge thank you for making the time to talk to us. Really appreciate it. Particularly today is bank holiday Monday, is Easter and you should be actually enjoying the sun. So my hat off to you for taking the time to actually talk to us but I guess a lot of business owners are working today as well. So we’re all on the same boat. You have an impressive over 50 years career of building, growing and selling a small to medium size businesses. How did it all start it?
– DP: Thank you, Maria. I left university and joined Nielsen’s and embarked on 30 year career in sales and marketing ending in 14 years of successful consultancy. But I wanted to have my own company and I saw an opportunity in surgical instruments.
– MP: Oh wow. Surgical instruments. That is a complete different field altogether. Isn’t it? So your surgical instruments company was called sight S I G H Ltd. And is a manufacturer, repairer and Seller of reusable surgical instruments company and this company is based in Croydon and in London, is that correct?
– DP: Yes.
– MP: You grew that company by acquisition. So why do you think buying business is the best route to grow rather than investing, say in Marketing or new product development or exploring new markets?
– DP: Well, acquisition is not the right strategy for everyone. If you have an innovative product perhaps with IPR and good USPs, then you should concentrate on building that only using acquisition if it helps grow this, say by expanding geographically. On the other hand, if you are a mature or in a mature fragmented market with lots of competition where actually has become commoditized then relationships between supplier and client can be very difficult to break down. And so acquisition is the best route for growth of customers, turnover and profits.
– MP: Well, very helpful. Thanks, David. And for the benefit of those listening but are not very familiar with the business terms can you explain what is an IPR and a USP so that our listeners are familiar with those terms?
– DP: Yes. IPR is intellectual property rights and USP is our unique selling propositions.
– MP: Oh, brilliant. Thank you. Thank you, David. So what are the main three pain points that small business owners need to watch when when they are acquiring a business?
– DP: Well, first of all you must secure the customers that you have acquired, that customers will sometimes, this will be a disturbance for them and use this as an opportunity to change. So you need to secure them quickly. You need to know and understand very well the sector that you’re getting into. If you don’t know it, be very cautious. Thirdly, you need to look for savings from the overheads of the business that you are acquiring to improve your profitability.
– MP: Indeed, indeed. Very helpful, David. I really appreciate it. And on that line, I have observed that so many small business owners seem to hastily buy a business that is for sale in the open market. Like if it was a property without a proper strategy, the strategy. So what is your experience on that?
– DP: Well, sometimes you need to move quickly especially if the business you’re acquiring is insolvent. If you do not know the sector intimately and rushing in could be disastrous.
– MP: Okay. Have you had any experience of disastrous encounters?
– DP: Only when I was learning how to buy and sell businesses and not planning, which is what I’m coming on to later before it, then you can end up making mistakes.
– MP: Yes, of course. When you’re buying is it’s all a new experience as well as for some small business owners. Some do it by trade others just, you know, they they see an opportunity to have synergies with another business and they go for it, rather doing you know, hastily into, into buying the new business. So what are the three most important things business owners need to do before agreeing to buy?
– DP: Well, first of all you need to do a very thorough due diligence so that you know exactly what you are buying. Secondly, you need to make a very careful detail for the acquisition transfer. Such as things like who is entering the stock who is entering the customer list, who will sit where, where will that machine be placed? And you need to be and to prepare for the unexpected. For example, a key employee is off sick the day you move everything, how would you cope? You have to have a plan B and you have to be very clear. Thirdly, you have to be very clear on the savings on the overheads that you’re going to make and implement them straight away.
– MP: Of course, that’s very helpful. Thank you, David. And it’s an interesting point, on the stock actually because I had once a case where the new business owners relied on the sellers for a disclosure of the stock as true value. And when the new business owner took over, they they found a white elephant in the room practically. So would you say that it’s better to thoroughly check the stock yourself before buying?
– DP: Yes. And what’s more, you need to know what that stock is and you need to understand what that stock is by that, I mean this is why you need to understand the sector you’re in because you could be just looking at boxes of stuff and it might not mean anything to you. And you might, for example, in the sector I was in, a lots of goods were sterile. So you need to check the expiry date for the sterility because if it’s running out in two weeks time it’s virtually valueless. So you need to know this, that is why you need to be very careful and very thorough in your due diligence and know what you’re buying.
– MP: Would you say that your diligence is better when you outsource it to an agent or would you would you carry part of it yourself?
– DP: Well, again, it comes back to whether you know the sector, an agent isn’t going to know the sector as well as you do better if you do the due diligence yourself. And you do need to be very thorough with it, very thorough. But on the other hand, when you are looking at the accounts of the company, you’re acquiring if you’re not a qualified accountant you should have somebody who is qualified like an accountant to look at the figures for you because they will see things that you possibly would miss. So it’s horses for courses. And if you’re looking at the customers, the due diligence on the customers, an agent is unlikely to know the significance of those customers, particularly it’s a sector your already in you will know those customers and and you’re better off doing the due diligence yourself.
– MP: Excellent. Thank you. That’s very handy. Good to know. Growing and growing by acquisition is a very extensive subject, on its own and with its on set of business pains to discuss, but we only have seven minutes and I’m very grateful that you’re taking the time to see me today on a bank holiday. So what would be the one word of wisdom you would like to share to those contemplating buying a business
– DP: Plan, then plan again, and then plan again.
– MP: We’re big fans of Planning at Better Business at Hand. We tend to say the seven Ps. What’s it called PRC[Proper prior] planning prevents piss poor performance. It’s used a lot in the army so I always like that the 7Ps
– DP: I can’t emphasize this enough. You have to plan very carefully down to the minute detail, and to the most unlikely contingency, you know you’re going to move all the equipment from one place to another and there’s a thunderstorm and electric storm, you know or a hail storm or there’s snow fall. Or as I said, somebody is ill. Someone who is key and is ill. I once moved, when I moved the business, we moved lots of machines. My colleague planned it. And he even marked on the floor, on the concrete floor, where the machines were to be positioned so that the the truck lift driver knew exactly where to place it. But if he’d been absent it could have been a problem to do that move
– MP: Of course, I can imagine. It’s quite interesting that you say that. A thunder storm or a hail storm can actually affect machines and I have also experienced in some manufacturing precision precision engineering manufacturing and you tend to forget that actually machines do get affected and it might take a couple of days for them to, actually start up, once that you moved them. So it’s, it’s very, it’s very helpful to actually plan for a proper move and allow time. Because if you have a production deadline, then you will be, you need to account for those periods that you need to move the machines.
– DP: You can, you must do that. But on the other hand for your customers you must be ready to go immediately. You can’t have downtime for customers. Okay, You might’ve have had to prepare for the machinery in which case maybe you need to build some stock before you move it so that you’ve got to stock up the cupboard because your customers won’t wait. You have to keep the continuity of the customers from day one.
– MP: Oh, very, very, very helpful. Thank you. Thank you David. I really appreciate it as always. It’s always a pleasure talking to you and talking to you, David, have been immensely insightful. I hope those listening or watching have enjoyed this short on business pains and found that useful. I always do, particularly when I talk to my colleagues on business issues. Like I said before every business pain has its own difficulties and they are a world on their own, but we’re here to serve, you can book David or one of our consultants from our meet the team page in our website. And that’s betterbusinessathand.app if you need a hand with a particular business pain, until next time. Thanks for watching and listening. Thank you, David. Have a good afternoon.
– DP: Thank you, bye.