You’ve checked the business location, the financials, and done all of your due diligence—or, have you? Leaving out a comprehensive reputation management investigation in your purchase discovery process can be a costly omission.
Financials may indicated the revenue was being maintained, however disclosure information may not show the real life ratio of incoming “new” clients vs. the “repeat” loyal clientele as well as the “talk on the street” about the business.
No business is going to voluntarily tell you that they have disgruntled customers. So, when investigating a new business you need to do a bit of detective work.
Send in “A Customer”
Depending on how/where the company does business either send in a “spy” to the bricks and mortar location to look at the clientele, go through an inquiry to determine customer service, and get a perception of the customer experience.
Talk to Neighbors and Competitors
While you may think that other companies may not want to divulge information, no one wants a “bad apple” in their midst and they will be happy to have the tide turn. If it is a bricks and mortar location the neighboring business will be thrilled to have the business transformed into a high traffic destination to bring in new customers to the area.
Competitors don’t want anyone to tarnish the reputation of their industry, and many will be happy to give you frank feedback in order to have things “cleaned up.”
There are many investigative services that specialize in reputation management, however, a quick search on the web will save you fees and give you quite a bit of information that will prove immensely useful.
How to Turn a Bad Rap into Good Opportunity
- Search the business name in each web browser (i.e.: Google, Yahoo, Bing, and AOL) in the business name, city, and state and see what comes up. Then put in the business name, city and “consumer reviews” and/or “consumer complaints.” Again, see what comes up. And lastly put in the name of the owner and the business name.
- Go to the Better Business Bureau and do a search. Again, see what comes up.
- Go to sites such as Yelp, Angie’s List, etc. see what people have written about their experiences at the business.
- Go to the company’s social media—most likely if there are negative comments they’ve probably been taken down. However, you might catch some comments that are still visible.
- Go to sites such as The Rip-off Report to see if complaints have been registered against the business
Let’s say a business is in a great location. The product it sells is a viable commodity in the market. Everything looks good…except their reputation. Don’t necessarily walk away. If all else looks good, AND you are willing to put in the work it will take to get the word out about your new ownership, you could be picking up a potential diamond in the rough…..at a bargain price.
Chances are the owners just want out. No one has a “bad business” without knowing they are disliked. With a comprehensive discovery process, you will have the correct ammunition to make an offer that reflects the actual state of the business, not just what is presented in spreadsheets.
Like all other factors related to a business purchase do your homework and understand the potential payoff. If you are “game” to put in the marketing and community outreach you might just want to keep this business on your “hot list.”
Remember, when YOU walk in and take over, you’ll be inheriting the reputation of that existing business—good OR bad. So, it is essential to know if this problem exists during your initial due diligence in order to make educated evaluations. And establish an accurate price for the purchase.