Why do Buisnesses go down hill as a result of being sold and hence under new ownership? (mortgage, finance)
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one example is a cafe I went to quiet frequently was sold by the former owners and is now under new management and hence has gone down hill. the food is no longer nice, they cut corners, not a tasty as it used to be, so what factors could it be? please tell, I really hate the establishment now.
Mostly, I suspect that the reason is that the new owner paid too much and has to increase the income in order to make the mortgage payments. I can think of two that went downhill with new ownership.
One was a bakery/ restaurant that only did breakfast and lunch. New owners changed the recipes for the baked goods so that they were no longer delicious, and made them smaller so that they were no longer a decent bargain. It didn't take them long to go out of business. Trying to make more money by cheapening the product doesn't work if your customers go elsewhere.
The other is a little convenience store where the buyer raised prices pretty substantially, I am guessing on the premise that he was the only store in the area. Well, all of us drive out into town several times a week. The workers drive out daily. So everybody just buys their gasoline and beer out in town instead of the little local store.
Most of us would pay an extra 10 cents a gallon for convenience but not nearly a dollar.
Hair salons do it all the time. A new owner comes in and the first thing he does is increase the prices. The only reason they sometimes last is because people hate to change hairdressers. The staff stays the same, but just costs more.
because often a "Business" isn't just the premise and goods, it's the people, owners and staff. Mess or change that and you no longer have the old business but a new one. If the new one isn't as good as the old one customers go elsewhere.
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I would say that it's the same reason so many new businesses fail. It's mostly the result of the new owner being underfunded, or not having the skills to operate the business. People thing that they can run a restaurant because they worked as a waitress or cook, or that since they have been a barber for 10 years that they can operate a salon. Running a business requires skills in accounting, finance, marketing, managing employees, facility maintenance, and more. If an owner doesn't have that, and can't afford to hire people to do it for them, they are destined to fail. I had a business for 16 years, and remember when a franchised competitor moved in just two blocks away. I remember talking to one of the people from that franchise at a trade show, where they advertised that "anyone can run this business." Just 6 months later the landlord there called to ask if I wanted to buy any of the equipment or supplies left when the owner abandoned it.
I would say that it's the same reason so many new businesses fail. It's mostly the result of the new owner being underfunded, or not having the skills to operate the business. People thing that they can run a restaurant because they worked as a waitress or cook, or that since they have been a barber for 10 years that they can operate a salon. Running a business requires skills in accounting, finance, marketing, managing employees, facility maintenance, and more. If an owner doesn't have that, and can't afford to hire people to do it for them, they are destined to fail. I had a business for 16 years, and remember when a franchised competitor moved in just two blocks away. I remember talking to one of the people from that franchise at a trade show, where they advertised that "anyone can run this business." Just 6 months later the landlord there called to ask if I wanted to buy any of the equipment or supplies left when the owner abandoned it.
This is the most important point a person needs to understand when thinking of starting any business.
This is obviously way too vague for anyone to answer. Some businesses advertise new ownership because the old owner let things go to hell in a hand basket and they want to let people know it's NOT the same owners. At the same time other times the new owners sink a business.
Could be any number of factors, obviously there's going to be some growing pains with a change in ownership, someone new is learning the ropes. Maybe they change suppliers and go with a cheaper aka worse quality supplier of items, maybe they are worried about money and trying to scrimp on portions, maybe the cook changes, really could be any number of things.
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