3 lessons learned from buying an existing business

Jen Remsik
Sep 4, 2018 · 6 min read

Buying a business always comes with unexpected challenges and hurdles.

Still, of all the types of business to buy, I imagined that an app with no employees and a steady revenue stream would be one of the simpler ones.

On May 1, I became the owner of Training Tracker Software, an app that helps users keep track of training schedules, certification deadlines, and onboarding checklists. Back in November, when the creator first approached my previous employer about outsourcing tech support and business development, we researched the market for competing products.

We found that users were currently using either basic spreadsheets or full-on learning management systems to track their employees’ training. There was no in-between product for companies who wanted something more sophisticated than a spreadsheet but didn’t need to store and administer the training materials internally. Training Tracker had developed a following in that in-between.

Right away, we saw opportunities to improve the user experience and streamline the administrative duties. It was a perfect fit for our skills. We brought up the idea of buying the product.

Within six months, we negotiated a revenue sharing agreement that would keep the creator involved for three years, we drafted a purchasing agreement, and the creator transferred all of the online accounts into my name.

Simple, right?

Not so fast.

I had worked as Adorable’s director of people operations for four years. I had my processes and checklists, and I assumed that everyone runs their business basically the same way.

Four months in, I am still unraveling those assumptions and learning valuable lessons about taking over a product from a creator.

Lesson 1: The fun stuff will have to wait.

We have many exciting user experience changes lined up for Training Tracker, as well as changes that should dramatically improve the backend of the business, like setting up a paywall and improving automated communication with customers.

But when we first dug into the entire product, we found several fires burning below the surface.

We discovered that many customers were still using outdated and unsupported versions of the software. Of course, I only realized that in the middle of a customer support call with one of those clients. The previous owner had not kept the records up-to-date indicating which customers were still using unsupported versions of the software, so we had to rebuild that documentation.

When I opened the Zendesk customer support account, I found more than 100 unresolved tickets. Many of the customer issues had actually been addressed, but the tickets hadn’t been closed. I had to weed through each ticket to find the 20 that were still relevant and dismiss the rest.

We also discovered several invoicing discrepancies. Because the software didn’t have an automated paywall, the owner had to process payments manually. There were no internal or external reminders about invoices or free trial end dates, making it easy for some clients to slip through the cracks.

Lesson 2: Don’t underestimate how much information is stored only in the brain of the previous owner.

Because the previous owner had never hired an employee to run the business, there were many details he had never thought to document. It’s almost impossible to transfer all of this information to a new owner at the beginning, but I could have given myself a head start by asking a few specific questions.

  • Are there any customers who have special arrangements regarding payment or communication?

Soon after taking over, I sent an email to all Training Tracker clients notifying them of the change of ownership. Almost immediately, a client contacted me saying their employees had received a suspicious email from Training Tracker. This client — one of our largest — had almost 50 individual users registered in our email system as administrators, instead of the two HR staff who should have been listed as administrators. So when users received an announcement that should have only been sent to HR, they got concerned. The previous owner had forgotten to notify me of the quirks surrounding communication with this particular client.

  • What is the proper way to transfer ownership of an account with a cloud-based service such as your web hosting or customer support software?

The previous owner transferred most accounts by changing the login information to something generic and then sharing it with me. Then I was able to change the username and password. However, with some accounts, the account owner information had been set up with the initial purchase, and could not be changed without the first owner’s consent.

  • Are any of these service accounts used for other businesses owned by the same creator?

If you’re a solopreneur running multiple businesses that need a 1–800 support number, it makes sense to use the same account for all of the businesses. The trouble comes when you sell one business, but not the other. I discovered that in several instances, the previous owner had given me full access to an account that pertained to several products besides Training Tracker.

  • What can I change without jeopardizing any intellectual property or trademarks?

One of the changes high on my priority list was rebranding Training Tracker with a new color scheme. But Training Tracker is a trademarked name. I was fuzzy on the rules of trademarks. Did the trademark restrict me from changing the color scheme? What about updating the logo or the font?

After talking to the previous owner, I found out that only the name was trademarked, and I did have the freedom to change the colors. But I’m glad I checked because I could have done damage to the brand if the trademark setup had been different.

Lesson 3: You need a support team to fill in the holes of your expertise.

If you’re immediately able to spot quick improvements to a product, you’re probably seeing areas where your expertise fills the gaps in the creator’s expertise.

But that also means that you’ll have some holes of your own — tasks and responsibilities that are hurdles for you but the creator could handle in their sleep.

This is why it’s important to have both a strong support team on your side and to maintain a good relationship with the creator of the product. In my case, I need help with many of the backend aspects of Training Tracker because I’m not a developer. When problems arise, I have a contracted developer available to help, but I still need to understand the problem to delegate out the solution. That’s where my support team comes in, whether it’s a former colleague or someone with a specialized skill from my personal network.

If you’re a control freak — and I like to say I’m in recovery — it will feel weird giving up control to your support team, but it’s an important part of taking over a new business.

Expect the unexpected, and maintain good relationships

In the past four months, I’ve learned a lot about decision making and priorities. Instead of diving into the changes I wanted to make, I’ve had to work on documentation and automation, which will free up more time for me to improve the customer experience.

I’ve learned that when you buy a product or a business, you can’t expect to make a clean break and experience a smooth transition. There will be complications you can’t predict, so you need to have a good relationship with the person you’re buying from, no matter how well you plan.

I would still do it again, but I would ask more questions and bring more realistic expectations into this transition time. I hope that this honest look into the unexpected challenges that come with buying an app helps other entrepreneurs hit the ground running when the paperwork gets signed.

Jen Remsik

Written by

CEO of Training Tracker, a cloud solution for training compliance and auditing | Event Coordinator | Puppy mom

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