Deal Insight Series:

How not to buy a business - Part 1

This story showcases the acquisition and turnaround of a struggling accounting and bookkeeping business by Rob Goddard. Following a two-year period of significant challenges, including losses of £650,000 and the looming possibility of closure, under Godard's guidance, the company made an impressive comeback. In just 18 months, the business not only became profitable again but also achieved a 400% return on investment. This story is set against the difficulties and setbacks faced and the essential lessons learned, as shared by Goddard.

Overcoming low staff morale

One of the main challenges right after the purchase was a significant drop in staff morale. This issue stemmed from the previous owner openly sharing the business's dire financial situation and its upcoming sale, which led to widespread worry and uncertainty among the staff. This situation caused many important employees to leave, including the Operations Director, who departed just 20 days after the new ownership took over. This unexpected turn of events forced Goddard and his partner, Paul, to become deeply involved in the day-to-day operations, something they had hoped to avoid.

Key strategies and changes

- Reassessing the Company Structure: This experience highlighted the importance of carefully reviewing the company's structure right from the start. It showed the need to spot and address any weaknesses that could arise from the loss of key staff members. This lesson underlined the value of having backup plans to maintain the business's stability and success.

- Understanding the importance of staff during a turnaround: The experience also revealed a mistaken assumption about employee motivation and loyalty. The initial expectation that employees would stay committed through the changes was quickly proven wrong. This emphasised the necessity for clear communication and proactive measures to keep staff motivated and loyal during significant changes.

Rob Goddard's effort to revive a failing business brings to light the complex challenges and valuable lessons that come with acquiring and transforming a business. Through his honest recounting of this journey, we gain deep insights into the importance of strategic planning, the ability to adapt, and how crucial the human aspect is in guiding a struggling business back to a path of success and profitability.