Congratulations on the purchase of your new business… now what?

You’ve spent months working with a number of financial and business advisors and you have finally completed the purchase of a new business.

You begin to assess the current state of the business on a more detailed level, trying to find ways to increase your overall profit. You will review things like the current product offering/pricing, marketing plans, sales team, etc.

What about your business expenses?

How do you know if previous ownership optimized their expenses? How do you know if previous ownership kept vendors out of a sense of loyalty or because they had always done things a certain way?

In my experience, many business owners stay with their current vendors because of a sense of loyalty. Over time they have formed professional and sometimes personal relationships with their vendor sales reps. They will say that the vendor has “always been good to them” and this familiarity can breed complacency when it comes to cost.

Another reason that many business owners stay with their current vendors is an aversion to change. There is a fear of trying something new and different, even if it would benefit the business.

Here are some real-life quotes that I have heard when talking to business owners about vendors:

“I have been using the same vendor and sales rep for almost 20 years; I have never really thought about making a change.”

“Patty has been handling our purchasing for over 10 years. I am sure that Patty is doing a good job and I don’t want to upset the apple cart.”

“My brother-in-law works for our vendor and I cannot really make a change without causing family issues.”

“My employee told me that there is no other vendor that can do what our current vendor does for us.”

A vendor audit is a great way to know if your business expenses are optimized, as it will answer the following questions for each cost area that is reviewed:

• What is the current cost structure and how does it compare to the marketplace?
• Are there any billing issues or errors that have been missed or ignored?
• Are there products or services that are being paid for but are redundant or simply not being used?
• Are there any process or procedural changes that would help reduce your business expenses?

Why not take a fresh look at the vendors being used in your new business?

With Schooley Mitchell, vendor audits are always risk and cost-free. If you would like to talk about a vendor audit, please reach out to me at [email protected]