This note was written in one of my blog (which currently disable for public viewing).
I received a letter below, which dated 2013.
I’m —- . Currently I’m in sales line but pursuing early childhood education course in Open University. Now on my 3rd year. My ambition is to open a preschool.
I got a news that a kindergarten owner who owns 3 branches in kota bharu town plan to sell off one of her branch as she can’t cope managing all by herself. She’s 58yrs old and none of her children wish to take over her business.
I went to see the location. It’s strategic as it’s near schools, offices and by roadside.
I plan to approach the owner on 1st May (as she’s in oversea for vacation now).
Through your experience, what should I ask and what to look for in buying over kindergarten business?
She has existing students with teachers… must I take over all the staffs and use the same books and syllabus?
Since she still has 2 more branches, can I continue to use the same name to enjoy the goodwill ir change name?
Will you give me some insight please?
Appreciate your advice.”
I was taking my time to read it, yet I found it important for me to share some personal views.
Read through this post, and may you benefit from the experience shared.
Below was my reply:
I really admire your strength as a working and studying person.
You are such an energetic young lady.
Well, it is wonderful that you have decide on what you are going to do.
Personally, I have not experience selling an existing school, but I did failed few attempts of buying over a school.
The advantage of taking over a business includes:
– possibility on leveraging on the existing ‘goodwill’
– the transaction can takes place at any time of the year
– an existing system in place
I will share my experience and believe that you can have some ideas.
There are 2 issues which need to be addressed:
- Starting a business
I strongly recommend that you use the most powerful business tools to validate the business idea, “Business Modal Canvas”. This tool is better to understand compared to an ordinary business plan.
- First, review the customer segment of the business.
Be specific. Study the numbers.
- Second, find the USP (Unique Selling Proposition) as in this model is the ‘value proposition’.
- Then, review the type of ‘customer relationship’ and ‘channel distribution’, which followed later with your ‘stream of revenue’.
Since the business is in operation, you can review the current situation and fill in the block (column).
- Then, you move to fill in the block of ‘key activities’, ‘key resources’ and ‘key partners’.
- After this is completed, review the whole blocks and find out whether the business is suitable for you to proceed with.
You can always speak to someone who knows this method if you need help.
Below is a video to start finding out more about the tool, “Business Model Canvas”.
- Taking over a business
This part will involve a lot of legality process.
You might want to check and find out more information, which relates to the business.
Partly what do you need to know?
Location is only one of it.
Below are some areas (information and documents), which normally buyers will look into when they want to purchase a business:
– Company’s profile including their financial status – this can be checked through SSM
– Business license, school operation license, local authority license – request a copy
– Seller’s financial status (if they will become the business partner) – check with CCRIS/CTOS
– Current income statement (of the transaction) – if they only sell the outlet / business premise
– The package offered – is it ‘as is basis’ or ‘stock lock and barrel’
– Transferred of agreement – rental agreement and any other if related
– The selling price vs future value – a proper valuation need to be done.
The price of the outlet will normally be based on all the information gathered as above.
I would strongly suggest that you have a partner who has the ability to advise you in all this matters.
Yes, money as the capital is important, but the professional advise is a real investment in business decision making process.
Well, regardless how much passion we have in the industry, business means business.
It must be able to generate profit for you as the owner, to deliver the best not only to the children, but also to your company, which later further benefit the staff and community.