Buying and operating a business can be fairly rewarding but can be very risky as well, if you don’t do it right.
As at N3 Business Advisors, we work primarily with Construction Companies, perhaps we can talk about the some of the experiences our past clients have had with buying, selling and turning around unprofitable construction companies into very successful ventures.
The construction business is one of the most competitive industries in the world. This means that many companies are competing for your business, making it challenging to find one suitable for purchase. However, if you know how to buy a failing construction company and make it successful, this can be done quickly. This article will provide all the necessary details regarding buying an existing construction company so it can be turned into something great again!
Start by identifying a construction business that is failing. When looking for a failing construction business, the first thing to do is identify the problem. Look for a construction company that needs to make more money and has been in trouble for some time.
Do your research and look at how they started, what they did well, What mistakes were made, and what steps could be taken to rectify them. Examine the construction business thoroughly.
- Check the financials
- Examine the inventory
- Check the equipment and materials used in construction projects
- Examine client list and employees; who are they? How long have they been working at this company? What type of experience do they have with construction or building projects?
Do they have any complaints against them, or are there any issues you can use to dispute their claims if necessary (e.g., “The worker broke my new window because he was underpaid”)?
A good rule of thumb for all business owners is to always ask yourself: What would someone else say about me if I were selling my company/service/etc.? If no one knows much about what happened at this company before it failed, then maybe there’s something wrong with how things were run! Determine why the construction business is in trouble.
When you purchase a failing construction business, it’s essential to understand the reasons behind its decline. The reason for failure could have been several different things:
- Poor management practices and employee turnover
- Lack of skilled labor or lack of funding for new equipment
- Lack of experience in certain areas (i.e., carpentry)
Reduce the value of business that you are looking to buy. Several strategies exist for lowering the expense of purchasing a failing construction business.
- Get the seller to pay for repairs, equipment, and other expenses. The less work you have to do on your end, the better off you are going to be in terms of saving money
- Get them to pay for legal fees if this is an ongoing issue with them (and some attorneys will offer discounts if they know it’s going bankrupt soon)
- Don’t forget about marketing—you want this business out there! If they’re not actively trying new potential customers through advertising or social media outreach, they’ll never succeed financially because no one will hear about their existence unless someone else mentions them first!
Ensure the construction business is removed from debts or loans it could not pay off. You should also ensure that the business has no debts or loans it can’t pay off. If it does, you will be responsible for paying them off. This may mean taking out a loan to do so.
Gather a team to help you turn the failing company around. Team members should be experts in their fields, and they should be people you can trust. They should have similar visions for the company and a desire to help you achieve your goals. The team members need the right skills to assist with turning around a failing construction company.
Set goals for how long it will take for the construction company to turn around and what will be needed to make this happen. The first step to making a failing company successful is setting goals for how long it will take for the company to turn around and what will be needed to make this happen.
- Set realistic time-frames: If you are looking at investing in a business, then it makes sense to set realistic goals for when your investment will pay off. You want to avoid a project that takes years or even decades before seeing any kind of return on your investment, so try to avoid setting yourself up for failure by waiting too long before trying something new
- Set goals for how much money you will need: It is also vital that you have an idea about how much money is necessary for this project/company/business idea/etc., whatever it might be called (or keep reading), To succeed financially so that there is enough left over after paying off debts and reinvesting back into operations, they can continue doing what they do best without having financial worries anymore!
Enforce a clean slate when it comes to employees and management. When you buy a company, enforcing a clean slate regarding employees and management is essential. Fire the existing management team and hire new people who know what they’re doing. Make sure that these new hires have the right attitude—they need to have a strong work ethic and be willing to bend over backward for their customers (or at least not cheat them). Why would anyone else if you can’t trust your employees with your money or reputation? Finally, ensure that these new hires are honest: If any secrets or embarrassing facts have been kept hidden. (and there will always be), then find out who they are before bringing them aboard as part of your company’s staff.
Update equipment and machinery used in the business
- Update equipment and machinery used in the construction process
- Replace old equipment with new equipment
- Replace old machinery with the latest machinery
- Upgrade the construction company’s software, website, and marketing strategy to attract more clients.
In conclusion, this article has given you an overview of how to buy a failing construction business and turn it around.
To recap: start by identifying a construction business that is failing, examine the business thoroughly, determine why it’s in trouble, reduce the price of buying the failing construction company and make sure it’s removed from any debts or loans it could not pay off.
Gather a team to help you turn the failing construction company around; set goals for how long it will take for your company to turn around; enforce a clean slate regarding employees and management.
At N3 Business Advisors, we often come across businesses for sale that are not profitable due to various reasons, like lack of funds, lack of sales or poor management. These businesses often require the right buyer to help them turn around. If done right, these kind of business opportunities can yield a way better results than buying a existing well run profitable business. Contact us today for today a confidential discussion