To think you can buy a business without having much prior knowledge about how it works

[Wetbankhols]

DH says you can't, but if the business is already running, surely you can?

[ProfessorPreciseaBug]

Home care as opposed to care home?

So you employ people to go to into peoples homes to offer care at home.. ?,

[Wetbankhols]

That is correct Professor

[shamelessmailhack]

In terms of experience it would help to work for a home care agency before jumping in. Your branch manager has to be registered and there is loads of legal stuff to consider that's hard to explain unless you've worked in the industry.

Also it may seem profitable but care agencies are extremely squeezed. For starters, carers will leave constantly and have to be replaced and trained. They can also be a nightmare at times with not showing up, and i've had all sorts of issues with them. Management don't stay long as the good ones are so in demand there's always the risk the current ones will be whisked away and you could end up with someone incompetent.

You should check what the deal is with council funding in your area. As mentioned before, it could go away and then you only have a few private clients left. The market being busy now also means nothing if there's a shortage of carers because you won't be able to recruit any. Look at things like their turnover.

You should consider an NVQ. I think it's called leadership in care management. You need to know about things like safeguarding. What would you do if a carer was accused of stealing or sexual assault? As I mentioned before, you and your managers could be hauled to court if a client dies.

[mummymeister]

Any idiot can run a business that is running well. the trick is how to manage when it starts to fail, when you get complaints, when people choose another provider over you, when you become uncompetitive, when your standards dip....

we run our own business and it is damn hard work. You have to know every aspect inside out so that if someone you have given a task or role to is failing to perform you can spot it straight away rather than it remain hidden until it causes a business failure.

before you take on this business, you need to have a really sound knowledge of profit and loss, how to bench mark your prices using your competitors, collecting basic business information about similar businesses around you, working out which level of service within the market place you are going to provide, working out which needs you will and wont meet, being completely up to date with all the health and safety and employment legislation as well as public liability insurances etc.

imagine you take on the business and on day 14 someone at work has a serious accident or someone makes a sad face daily mail complaint that gets into the papers. you have to be confident to deal with this. the issue about running your own business is that the buck stops with you and if the shit hits the fan you are always the one in the firing line so make sure you are absolutely confident you can deal with these things.

I have been running this business for 15+ years now and enjoy it especially the self employed aspect. however, if I had known 15 years ago what I know now about the hours I have to put in and the complexity of it, I wouldn't have done it.

[Wetbankhols]

I do work for home care, thanks :)

Finding good carers is always an ongoing challenge. There are a pretty good team here now but obviously that could change.

Trying to find out about an NVQ now.

[ProfessorPreciseaBug]

Suggest you do more research and report back...

It seems there are a number of people here who can offer advice, but you need to know more..
Also suggest you look into some management training for yourself. This is a people business. Looking after your people will be one of the biggest problems. Good managers have basic ability but are also taught how to be good.

[Wetbankhols]

Yes, but it's difficult to know where to start with research, Professor - have read a few things online about people who made a go of it but the general consensus seems to be "learn as you go along, and try to do an NVQ."

[mummymeister]

No wetbankhols do not learn as you go along and do an NVQ!!!

Be brutally honest with yourself. are you are manager and have you ever been in a managerial role? how many people have you managed?

do you understand how to read and interpret financial information?

you need two sides of the business. first the practical knowledge as in "what is it that my staff do all day at all levels within the company" and second some management skills - good basic maths understanding, communication skills, management skills.

you would be better off doing a management course for a year or two part time and spending the rest of the time working within the business and shadowing people at all levels.

a business like this is a bit like a duck. you see them gliding along effortlessly making a profit. what you don't see is the frantic paddling underneath.

the world is littered with people who brought businesses that were running well and ruined them. people who have got into personal debt when a business has folded. people who have ended up in court for health and safety, food hygiene etc.

reading a bit on the internet doesn't cut it I am afraid if you want this to be a success and not a milestone around your neck.

[Wetbankhols]

Did you do all of that, mummy?

I hear what you are saying, but a lot of what you suggest isn't practical - I can't just decide to shadow people, although I do know a reasonable amount about how the business itself works.

I agree 'reading a bit on the internet' doesn't cut it but then, what DO you do? :)

[mummymeister]

yes, wetbankhols I did. I did a part time 2 year management qualification which previous employers paid for when I realised that I no longer wanted to work for other people and wanted to be self employed. it was an eye opener and taught me about the 4 P's of marketing, benchmarking my products and services as well as all the legal side of being "the boss"

before I started up this business I worked in a similar one unpaid for 6 months to shadow everyone in it.

when I started up I had a small business advisor to help and also a business mentor plus I joined the local business forums - FSB and others - where I got support and help.

in my previous job I managed a team of around 50 people and a 6 figure budget so felt confident to do it in a smaller team, which we were of course when we started out.

how many people have you managed before wetbankhols?

[MiscellaneousAssortment]

You need Management skills, and Business skills. Management skills are incredibly important, it's like the jam sticking the day to day workings to the business side, the p&l, accountancy etc.

Without the jam in the middle, you get two dry and unappetizing pieces of bread!

[Wetbankhols]

I have got management experience although in a school setting, so I recognise that is different.

I'm willing to learn, but that has to be within the realms of possibility, if you see what I mean :)

[ClashCityRocker]

You do need an accountant - you want a due diligence report doing on any business you are thinking of acquiring - just looking at the accounts and thinking 'hey, that's a good profit' is pretty meaningless.

As a cautionary tale, one company we were looking into for a client had a great p&l account - until we dug deeper and discovered they had been treating one income stream as exempt when it was in fact subject to standard rated vat. This meant over the four year period the company had under declared hundreds of thousands of VAT. The vat liability wiped out the balance sheet value and that was before penalties were calculated.

You also need to understand the balance sheet - for another example, profit was great, balance sheet was poor - 80% of turnover was included in debtors (ie, they were due to be paid, but hadn't yet been) and there were huge cash flow problems due to poor financial management and not chasing up amounts due. The director had been putting cash into the company - which meant a huge directors loan account that would need paying out.

You will also need to consider the business structure - will you be purchasing shares, or perhaps more sensibly hiving the business across to a company you've set up?

You need to think about indemnities, particulalry in an industry which has such a high risk of litigation - if the company is sued due to an incident that occurred prior to you taken it over, the company will still be liable - or as in the example above, errors are discovered.

None of these things are insurmountable, but you do need specialist advice.

[Wetbankhols]

Thank you, Clash, that post was really helpful. I'd definitely have an accountant - I sometimes sound more flippant than I am in my writing style but this is something I'm taking very seriously.

[mummymeister]

management is management whatever the setting. its all valuable and useful experience and is a transferable skill. was it day to day management? financial? where are your strengths and what are your weaknesses. do a swot analysis on yourself as a business owner and this will indentify where the gaps in your knowledge and skills are so that you can work out how to address this.

the key difference between this business that you are taking on and other start up businesses is this. with a start up business there is usually only one person involved - you. so if it fails then only you have lost out.

if you take on an existing business with staff and salaries then these staff are depending upon you and your business skills to pay their mortgages. its a huge responsibility.

paid support to a business like accountancy etc is great but its what you put in that will determine its success or failure.

[Wetbankhols]

A lot of it is learning as you do, though, as I think you'll appreciate.

[topcat2014]

What are you actually getting for your money though? Sorry haven't RTFT - but bear in mind that franchises are an excellent way of separating people from their redundancy money.

If it is some kind of 'agency' then there won't be assets as such - you are basically paying for an address book.

What is to stop you setting one up completely from scratch - surely there aren't really any 'brands' in this sector worth paying for?

[Wetbankhols]

Well, it's not so much the fact that it's a franchise as the fact that it's established, with established staff and established clients (how many times can you use 'established!')

Breaking away from the franchise in the future is a possibility though; others elsewhere in the country have done so.

[TickleMcTickleFace]

Don't assume the managers and staff will stay there once the owners leave - we took on a business and there was an initial migration of staff which is normal, quite often people want to move on and something like that can give them the push to go so you might find a couple of months down the line your key people have gone and if you don't have knowledge of their roles etc you will struggle to recruit their replacements.
Secondly the accounts and profits you see may have been massaged knowing they were going to sell so I'd recommend doing your own projected finances for at least 2 years and see what the reality is.

[topcat2014]

OK then, an established franchise - two questions:

1. What are the franchise fees - usually expressed as a percentage of turnover.
   
2. Why are the current owners selling
   
3. What is to stop the current owners ringing round the existing clients and poaching the work?

[topcat2014]

of course that's three qs - duh..

[Wetbankhols]

They may do. The whole thing may collapse. But the fact is some don't, and there will always be people needing care, and I do feel that potentially this is something I could be extremely good at.

[mummymeister]

learning as you do, is great in theory. in practice whilst you are learning the books still need doing, the staff client disputes need resolving, the marketing needs to happen.

I just think going into a new business any business is hard enough as it is. but if you go in without the business intelligence that you need then you are setting yourself up to fail.

be honest with yourself about your skill set. do a swot analysis. speak to a small business advisor. join the local trade association for your chosen area of work and network a bit to see what its like.

bear in mind also that when there is an established business and the previous owner either retires or sells up some of the staff, and it might be key staff, will also leave. very rarely does a business sale not result in some people leaving. could you do the job of someone/anyone in the company if they left.

you have posted on another thread about NVQ's. sorry, just don't rate them as a qualification for someone wanting to manage and run a business. have a look at a DMS or similar. see what grants there are locally to help you to train. you would be surprised what funding there is out there. not sure of your age but Princes Trust?

[Puzzledandpissedoff]

The whole thing may collapse. But the fact is some don't

While this is true, successful companies tend to be those built on solid foundations by experienced, hands on owners. Granted everyone's got to start somewhere, but I honestly doubt something so needs-focused is a wise place to start

No offence, but IME it's generally pretty obvious when a company lacks strong management; it's said that most fold within the first few years and this is a large factor in those failures ...

[Wetbankhols]

But that experience has to come from somewhere, Puzzled