a small amount of growth each year, like 10%, can double the ROI over 5 years. Be Careful of Capital Equipment Refresh - Businesses that are capital intensive need to have this capital equipment refreshed on a regular basis. Often when a sale comes up, the owners have put this off and been ‘sweating’ the assets. This leaves a new buyer needing to use cash to implement a refresh program. If this was not understood at the time of purchase, it can cause a lot of problems. If this is understood, it can be managed and modelled and is usually not a problem. Good Systems - Most businesses are about the people that deliver the service which is true. But these people need to be organised through good systems. The people should have figured out 1000s of details about how to optimise their service to the customer and this should be understood, repeatable and documented so new people can be trained and KPIs monitored. When you are buying a business, a big part of what you are buying is these systems. If they are not well documented and sloppy, when the owner leaves, it could cause serious disruption to the operations of the company. A company with good, well-documented systems is much easier to take over and absorb the loss of any staff. This goes hand in hand with good books and records. Understanding business performance metrics is critical to managing any business (if you can't measure it, you can't manage it is the old axiom). Poor books and records cast doubt on whether the business results are accurate at all and whether the products and services being delivered are profitable. Not understanding that can lead to the wrong decisions and weaknesses in managing cash flow, which is one of the leading causes of businesses going out of business. People You Like - The leading cause of business sales not getting to the closing table or not delivering after the sale, even if it does can usually be traced back to what we call ‘poor cultural fit’. We use the
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