If you’re a business owner you’re probably familiar with “mergers and acquisitions:” transactions where ownership changes either through companies combining or transferring. The company taking ownership of an already existing unit or responsible for business units being combined inherits both the good and the bad from the organization its newly in charge of. This is also the case with spinoffs, where a child unit becomes independent from a parent company. Any of these new entities can reap the rewards of superior technology, exceptional talent, or inspired business practices that come with establishing a spinoff company or adding a business unit from an already existing business. Equally, new entities can also be slowed down by outdated platforms, a reticent staff, and inefficient processes. In addition to the obvious issues, business owners can also inherit a reputation that is less than stellar that they now have to remedy.
Managing your reputation as a spinoff or dealing with the reputations of businesses you acquire or merge with can be challenging, but it’s not impossible to turn the tide. Here a few ways you can help turn a stale reputation into something you can be proud of.
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Start with Customer Facing Issues
Does the business you’ve acquired have a lot of customer complaints on social media? Consider reaching out to those who have complained and informing them the business is under new management, then offer to help them anyway you can. No matter how hard you work on building a reputation with new customers, you can always be thwarted by your past reputation if you do not reconcile those past grievances.
Next, Manage Your Business Relationships
If you work with vendors and suppliers, you’ll want to communicate with them about your recent purchase. Acquiring a company that didn’t pay attention to its business credit can affect your own company’s scores and ratings. A change in your company’s scores and ratings could indicate to your partners that you’ve become more high-risk, and they may make decisions based off your new scores, such as lowering your credit limit or changing the terms of your contract.
Arkos Field Services, LLP is a company that knows this all too well. After creating the company as a spin-off, Arkos had to manage its new reputation amidst a challenging start. Historical accounting information, including payables, was incomplete, and there was confusion over which payables had been settled prior to the spin-off and which outstanding balances belonged to which company. The company’s business credit scores and ratings were a factor in hindering its ability to get credit extended from vendors and seemed to be negatively impacting rates from its insurance carriers.
“When I assumed control of supply chain management, few resources had been dedicated to improving the company’s credit score, and it was about as low as it could get,” Larry Sumrall, Supply Chain Manager of Arkos, said.
Proactively reaching out to your vendors and suppliers can help ease concerns in the short term, but you’ll need to prove that you’re serious about turning the company’s business credit profile around.
Finally, Manage Your Business Credit
In Arkos’ case, Sumrall decided something needed to be done, and the company started working with a Dun & Bradstreet Concierge Manager to help positively impact the company’s business credit file.
If you find yourself in a situation similar to Arkos’ you can take similar measures to help manage your own business credit file. You can update your company information , like recently acquired businesses, for free. You can submit trade references* to Dun & Bradstreet to help impact your D&B® scores and ratings. If the company acquired, the parent company, or one of the companies in the merger did not manage its credit, the company’s business credit file may be full of only negative payment experiences, like slow payments and you might decide you need more help cleaning it up – which is exactly why Akros decided to hire a dedicated Credibility Concierge Manager to help manage its business credit file.
“Our Concierge Manager, Melissa, was able work with our vendors in submitting positive payments into the system,” Sumrall said. “She explained that our report reflected negative payment issues from our vendors but did not reflect any of the positive information from our up-to-date payments. She was also a great asset in helping dispute slow pays – the black marks in our business credit profile.”
Once Arkos business credit file was truly reflective of the company as a young and growing business, Arkos was able to work with its vendors and get them to see the real Arkos. “We were able to go back to vendors that had been difficult to deal with in terms of increasing our credit limit or extending our terms and tell them to check our Dun & Bradstreet scores again,” Sumrall said. “When they did look again, they increased our limit and extended credit. The ability to obtain better credit terms also positively impacted our short term cash flow and made us more attractive to our insurance carriers.
If you’re dealing with an inherited reputation that doesn’t reflect the credibility of your company, you can start managing your reputation, and your business credit, today. Check your online presence for any outstanding grievances, reach out to your vendors and suppliers, and call a Credit Advisor at 1-800-701-7168 to get your free business credit consultation*. Don’t forget to ask about getting your very own dedicated Concierge Manger.
Photo Credit: SBphoto, Twenty20
*The information and advice provided by Dun & Bradstreet and its Credit Advisors during business credit counseling sessions are provided “as-is.” Dun & Bradstreet makes no representations or warranties, express or implied, with respect to such information and the results of the use of such information, including but not limited to implied warranty of merchantability and fitness for a particular purpose. Neither Dun & Bradstreet nor any of its parents, subsidiaries, affiliates or their respective partners, officers, directors, employees or agents shall be held liable for any damages, whether direct, indirect, incidental, special or consequential, including but not limited to lost revenues or lost profits, arising from or in connection with a business’s use or reliance on the information or advice given during any counseling session.