Deborah Meaden’s top tips for takeovers

If you decide to make the jump and set up your own business, chances are you’ll be offered tons of well-meaning advice.  Some of it will be helpful, some of it will be rubbish, a lot of it will be contradictory.  In Common Sense Rules, the new book from Deborah Meaden, the denizen of Dragons’ Den sets out to question the truth behind the clichés. Meaden believes that it is only by busting the myths behind these clichés that the business world can really move on.

In a series of 4 articles, Deborah Meaden will reveal to the The NextWomen her best tips for Success as an Entrepreneur. Here, in the third of the series, Deborah Meaden gives her top tips for takeovers.

If you dream of being your own boss but haven’t yet come up with an amazing idea for a start-up you might think about buying an existing business. I often think that just as much, if not more, entrepreneurial skill goes into turning around an existing business than it does in starting up a new one. It takes the vision to spot a business that is doing well in spite of itself and the nous to see the improvements you can make.

Here are some key questions to ask yourself when you’re considering buying a business:

Can I make a difference?

The key to buying somebody else’s business is knowing that it can do better and being able to identify clearly what changes need to be made, how long it will take, how much it will cost and – most importantly – how much profit those changes are going to generate. Having a clear plan of what it is that can be done to make it better, rather than a vague notion of fancying giving it a go, is essential.

Am I thinking about this opportunity rationally?

Buying a business can be an emotionally charged experience. However, I would urge you to try to remain rational. Being passionate about business is important, but if you can’t find the right business, or it’s not the right time, or something just does not feel right, you should walk away rather than regret rushing into something. Keep a cool head and take a long, hard, critical look at the proposition in front of you and then, if you are still totally convinced of the opportunity, get passionate and go for it.

What are the business’s strengths and weaknesses?

All businesses, no matter how badly they have been run in the past, will have some good qualities that customers liked. The trick is to find them – and fast. The best place to start is to talk to the people who already work there. I always have a round-table meeting with all of the key people in the business at the earliest opportunity and ask everyone in the room:

‘Right, what is the plan? What could you do for this business?’

Who are the key people, and how will I get them to stay?

If the due diligence is done properly, it won’t even have been necessary to have met these key people to know who they are. They are the ones who are behind the departments that are working really well. Once you’ve taken over, let them know immediately that you think that they are good. Be completely honest with them. Ask them to work with you to turn the business around. If they’re considering handing in their notice, ask them to give you three months, because at the end of that time they and the business could be sitting on the best opportunity ever.

How will your customers feel about the change?

It would be a mistake to overestimate how much difference a change of ownership will make to customers. On the whole, customers could not give a fig who owns a business and generally don’t find out who does until the day they get upset with the company and decide to make a complaint.

Successful UK businesswoman and entrepreneur Deborah Meaden is best known as one of the dragons from BBC 2’s hit show Dragons’ Den. One of the most popular shows on BBC 2, it regularly attracts audiences of over 3 million. Deborah has had an extremely successful career in business, starting out at the age of 19 with her own glass and ceramics import company, moving on to run one of the first UK franchises for Stefanel, an Italian footwear and clothing firm, and eventually joining the family company, Weststar Holidays. She staged a management buyout in 2000, and in 2007 sold the business in a deal worth £83 million, giving her the freedom and capital to invest in new opportunities. Her Dragons’ Den investments range from MixAlbum, an automated music mixing system, and Magic Whiteboard, a product that combines the best of a flipchart and a whiteboard, to Sarah Lu, inventer of yoodoodoll, a doll that you can make resemble anyone you like (or dislike).