A business run under management is whereby the owner takes a step back from the day-to-day involvement and relies on an employed manager or management team to run the business. There are considerable benefits to buying a business run under management although not without an element of risk, both must be considered.
What Does Under Management Mean When Buying a Business?
A business run under management is whereby the owner takes a step back from the day-to-day involvement of running a business and relies on an employed manager or management team to run the business. There are considerable benefits to buying a business run under management although not without an element of risk
Perhaps the biggest benefit of running a business under management is the time, freedom and flexibility it offers whilst allowing you to still maintain ownership and hold control over decision making in regards to operations, strategic direction, KPIs and overall function.
By running a business under management you would most likely receive a passive income stream which provides some financial freedom to pursue other interests and investments. By not running the day to day operations it provides the flexibility to dedicate however much time you like to overseeing and growing the business with the knowledge that it will still operate effectively under reliable management. An owner has the flexibility to utilise the time not allocated to the business to pursue other interests, endeavours and lifestyle goals.
Purchasing a business run under management provides a new owner with the ability to analyse current operations in depth from the outset without initial interference, providing a great opportunity to assess the strengths and weaknesses of its operations and business practices. If the new owner isn't particularly familiar with the business or industry having a manager in place minimises the risk and initial pressure allowing for a learning period and industry exposure without jeopardising current operations and workflow. Additionally, having the business run as usual will be less likely to cause disruption to existing customers.
Although purchasing a business run under management has considerable benefits, including potential tax advantages for your personal finance as the owner of an operating business, there are risks. There is always a risk in handing over your asset and as such a loyal, reliable and honest team is critical. Ensure you have the right manager or management team in place to guarantee the business continues to run efficiently, effectively and successfully.