Making a Smooth Management Transition

Rob O’Regan -- Expert Business Source, 1/29/2007 8:40:00 AM

Running a company is hard enough. Parachuting into an existing business as a new owner can really raise the stress level, for owner and employees alike.

Christine Adie took such a leap a year ago when she purchased Coffeeberries, a gourmet coffee shop in Londonderry, N.H. She offers these lessons learned for anyone taking over a small retail business.

Formalize a transition period with the seller. As a first-time owner, Adie did not want to jump in without a safety net, so she negotiated a two-week post-sale period with the seller to go over the books, vendor agreements, inventory, and other operational issues. Adie gained additional expertise by re-hiring a former employee who had a firm grasp of the business. “I knew [the former employee] from when I first started going there as a customer,” Adie says. “I knew that she knew the business and could be very helpful with the details.”

Prioritize, prioritize, prioritize. A new owner will immediately see a hundred things she believes she can do better than the previous owner. To avoid being overwhelmed, it’s important to focus on the business-critical pieces first. For Adie, priority No. 1 was bookkeeping. The previous owner’s inefficient paper-based system had to go, replaced with QuickBooks. Next was the scheduling system; Adie moved from a one-week schedule to a two-week planner, which made it easier for both Adie and her employees. Third: reviewing supplier relationships and consolidating vendors to eliminate redundancies and lower costs.

Set the right tone with employees. As the saying goes, you get one chance to make a first impression, so don’t blow it. Staff members think of one thing when a new owner takes over: Will I be fired? Adie’s team of part-timers was particularly skittish, based on the sometimes adversarial style of the previous owner. “I wanted to make sure they knew I wasn’t going to get rid of them all,” she says. “They were very appreciative of the change in tone. I wanted to set a better tone with them so they would set that tone with their customers.”

Reach out to former customers. Adie discovered she had some bridge-building to do with former customers who had stopped coming to Coffeeberries. She did not heavily promote the fact that new management was in place, relying instead on word of mouth and an article in the local paper about the sale. Importantly, Adie made sure the shop offered a more customer-friendly setting. To the returning customers, Adie says, “I thanked them for giving us a second chance.”

Don’t sweat the small stuff. “Keep your eye on the big picture,” says Adie. “Don’t get frustrated by the little nagging things.” That’s sound advice on any level.

Rob O’Regan is a freelance writer based in Londonderry, N.H.