There are usually distinct drawbacks which businesses face by purchasing already existing business establishments. For instance, most of the businesses have deep rooted shortcomings which sellers do not expose to the buyer. In this case, such problems become non-collectable later after one has already purchased the business. However, there are possible solutions to such predicaments at any given time. For instance, Mark Zimmerman purchased the Spare Time Equipment, an old business which gives him much worries.
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The fact remains that the owner of the business had made unrewarding returns and that was the main reason why he sold it to Mark. Though the business made huge sales, it kept on making losses. Therefore, it is always vital to conduct adequate research about a particular business before you buy to avoid such hurdles. This will eventually reduce fears and loss of motivation due to risky undertaking.
Though the business was selling just two brands of small pleasure boats, snow mobile jet-skis, line of trailer and pick up-track trailer, Mark decided to add the inventory by borrowing money from friends and from his personal savings. At this point, he did not consider how the current sale would impact on his business.
Evaluating the current performance of a business can turn out to be daunting. However, Mark Zimmerman could have been diligent enough to first analyze the demand of the existing inventory before topping it up. In this case, it is advisable to explore the financial performance of an existing business before stocking it.
Additionally, it is imperative to evaluate and understand the base of current customers. In most cases, one might buy a business and inherit customers who are dissatisfied with the services or products offered by the business person. For instance, Mark gets annoyed by the fact that his competitors are able to sell similar products at the cost less that the manufactures suggested price. In this case, he should investigate whether his customers might be dissatisfied by his products’ cost.
This can be analyzed by the fact that he fears that competitions might get tough in terms of prices whenever online boat shows commence. The fact that he has tried to build a good image for his business through online advertisements, does not make his business viable. In this case, there is need to understand that whenever you buy a business, you need to decide whether to retain the brand name or to change it.
Hence, it is advisable that Mark should construct a new brand name, remodel the costs and the quality of services you give to customers. By so doing, he will be able to demonstrate originality especially when advertising for products and this might attract more customers as opposed to the case of retaining an old brand name.
Besides, in case the business does not give adequate returns, there is no need to restock it with the previous products. Instead, it is advisable to get into discussions with customers in order to understand their interest. Therefore, instead of jumping into a new stock just like Mark did in the name of improving profitability, he should sit back and come up with a list of equipments that are on high demand in the market.
Regardless of whether the manufacturers are willing to do some local advertisements on behalf of the business, he should consider their value, usage and preference by customers. Imperatively, Mark should also go for goods that sell at a particular season. Failure to do this, there is a likelihood of causing delay a factor that ruins the performance of the business.
It is also imprudent to assume that customers are likely to like the goods which you intend to introduce in the business stock. Instead, one should conduct a market feasibility test in order to have a hint of the kind of products that could satisfy their needs. Failure to consider such factors can lead to adverse effects since in two years time, Mark business could still ran at a loss.
Furthermore, even without adequate information regarding the marketability of new products, there is a need to evaluate the balance between cost incurred and the possible returns. For instance, the fact that Mark introduced lawn equipments in his business; they never gave him the expected amount of returns. In the long run he never made any substantial profit.
This drives one to the point that business is not how much you sell but how much you gain. In this case, Mark should analyze and compare the manufactures price and the willingness of the customers to buy his products at the set price. At any time he identifies that neither the customers are willing to buy goods at a certain price nor the manufacturers willing to lower their prices, he should look for an alternative product that will give him better returns.
Conversely, the convenience and uniqueness of a product are important factors to be considered before making any purchase of new products into a business. For instance, the issue of the mountain bikes which he intends to introduce with the feeling that they have high demand among students is workable. Nevertheless, since there are competitors dealing with such goods, Mark should opt to purchase bikes that are different from those in town shops.
Moreover, Mark should also ensure that he deals with merchandises that are service-oriented and durable. To reiterate on this, Spare Time Equipment can do better only if effective strategies are employed to downsize the existing challenges. Examples of possible solutions include understanding customer’s interests, establishing customer-friendly prices, conducting market feasibility to evaluate demand of products and establishing service oriented goods.