08 May Around the Web: A Week in Summary
A recent blog post from Transworld Business Advisors entitled “Market Research: What to Look for When Researching a Business to Buy” explains what market research is and why it’s important for business buyers to understand.
Market research is the study of consumer behavior for the purpose of understanding what drives an individual to purchase a product or service. Areas that are studied include cultural, societal and personal influences that affect decision making and purchasing habits. For business owners, this research can make a resounding impact on whether or not they are able to operate a successful business. The results of such research can be used to improve inventory, determine how and where the business advertises itself, and how to price certain items. For a business buyer, market research is important to determine the type of business they would like to consider and what type of potential each business realistically has in their market.
A recent blog post from VR Business Brokers entitled “Attorney Selection for Business Deals” discusses the importance of choosing the right legal advisor when engaging in a business transaction.
Business brokers are frequently asked about attorney selection when approached by buyer and sellers. Many are either looking for a recommendation on who to hire or on what to look for in an attorney. Naturally, legal consultation is a key when it comes to selling a business. Below is a list of things to consider when choosing legal counsel for a business transaction:
- Only consider a business attorney. Lawyers who specialize in other niches won’t have the intricate knowledge necessary to best help you navigate an intricate sale process.
- Don’t look for a cheap lawyer. Legal fees should cost about 1-2% of the proceeds of the sale.
- Find a lawyer that you feel comfortable with and trust. A good indicator is if you’re comfortable asking your lawyer to explain things in a language you will understand and they will.
- Watch out for red flags. You don’t want to hire a lawyer who is unresponsive, misses errors in paperwork, doesn’t work with you towards a common goal or isn’t an attentive listener.
A recent article from Axial entitled “5 Best Practices in Conducting Customer Due Diligence” discusses the importance of customer due diligence and how to get the most out of your research.
While financial due diligence can give you a clear picture of the company’s past performance, interviewing current clients can give you a better idea of future performance and growth potential. Performing in-depth customer interviews can also provide insight into potential risks revolving around customer concentration or competitive threats. Set yourself up for the best results by following these 5 best practices:
- Interview a wide range of customers. Top customers can provide just as much insight into the inner-workings of a business as underperforming accounts.
- Hire a professional interviewer. Someone with experience will be more objective and neutral as well as be more effective with their questioning.
- Identify what to ask. Asking targeted questions will provide deep insight and more productive feedback.
- Look to the future. Customer interviews provide an excellent opportunity to discover unmet needs and potential for company growth.
- Turn insight into action. Conducting customer interviews creates intimacy from day one, use your new insights and relationship to place strategies into action.
Performing due diligence is an important step for every buyer to complete. The insight that it provides can not only save a buyer from making an undesirable purchase, it can also set you up for success from day one. Including customer due diligence in the process shines a light into many of the less visible aspects of company culture, performance and potential.