There’s an old adage that says: "if it ain’t broke, don’t fix it". On the other hand, one of the classic business books, "If It Ain't Broke,…Break it!, "written by Robert J. Kriegel and Louis Patler works towards dispelling the old myths and truisms that if you don’t look at new ways, sometimes unconventional, to operate your business, you’re doomed. There’s certainly merit in that thinking.
The reason I bring this up is to discuss the absolute dismal state of one of this nation’s business icons, The Ford Motor company and how recent moves compare to one of the biggest mistakes made by people who buy a business.
Ford is in shambles. Their new CEO, Alan Mullaly, a newbie to the auto industry, recently stated that Ford should never have abandoned the name Taurus for its flagship family sedan. The Taurus has been replaced with the name of the Ford Five Hundred. Now, here’s the crazy part: according to Mullaly, "Taurus has "80% instant name recognition; only 40%, even after all the (marketing) work we've done to date, recognize Five Hundred…." What bothers me is some auto industry experts are predicting failure for Mr. Mullaly because he is not an industry "insider". Personally, I think my 11 year old son could have determined that dropping the Taurus name was business suicide; how on earth did the so called experts at Ford allow this to happen? To me, this is a perfect example of fixing something that categorically does not need fixing. (you can read the full article at: http://www.usatoday.com/money/autos/2007-02-06-tau... ) By the way, you’ll read in the article that Mullaly is going to trash the Five Hundred name, and you guessed it, bring back the Taurus – great move!
Some, make that most businesses, would give anything to establish the kind of brand awareness that Taurus enjoyed. The Taurus strategy, or perhaps insanity, encapsulates the precise problem at Ford. They obviously do not have the savvy to recognize a good thing when they have it. One need only look to the Japanese automakers (Toyota by the way is now number three of the Big 3 and guess who is # 4?) to see that year after year, they keep reinventing their winners: Honda Accord, Toyota Camry, Nissan Maxima. Sure they introduce new products, but they don’t kill the old ones needlessly.
So what on earth does this have to do with buying a business? Actually, the parallels are uncanny. One of the most important strategies that any buyer of a business must do immediately after they take over a business is nothing! That’s right, don’t change anything…yet! Unless you have a wealth of experience in the type of business you buy, you first have to get the "guts" of the business in your belly.
I have heard countless stories of a business changing hands and within three months, it is spiraling downward. The culprit, almost always, is the new owner hallucinating about the changes that should be made, and they turn out to be disastrous. Of course, I am not saying you shouldn’t do anything in the future. During the process of buying a business, it is easy for you to critique the business and think about all of the wonderful things you can do to grow it. Some may be good; others won't. The problem is that you really don't know for sure until you've immersed yourself in it and learn all of its peculiarities. Your initial plan after you buy a business is to first learn the business - familiarize yourself with the industry, the customers, the suppliers, the employees, the marketing, and the competition.
I am a huge believer in working everyday towards make my business bigger, and better. Certainly, I’ve made and will continue to make some mistakes, and that’s fine. However; my strategies are based upon years of hands-on experience, with relevant data, and so thankfully most of these decisions prove to be advantageous. That’s what you need to do as well. You’ve got to learn before you can earn.
After you buy a business, your plan for growth and change must be based upon hard facts, and conclusive data. Only then can you implement any significant changes. Remember, the idea behind buying an existing business is to have a built in infrastructure, and a scenario where the phone rings on day one and you can generate immediate cash flow based upon the historical financials you analyzed and want to sustain.
This article represents a fraction of what you’ll learn on this topic in the How To Buy A Good Business At A Great Price© series - the most widely used reference resource and strategy guide for buying a business. To learn more click here
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