How AI Affects Buying A Business?
The impact of AI on businesses is still in its infancy, comparatively speaking, so the long term effect of AI on businesses, as it continues to advance, is not entirely known at this stage.
Artificial intelligence needs to be a consideration when you buy a business, both positively and negatively. Positively, you could introduce AI after buying the business to make it more efficient and profitable, but negatively, avoid a business that could be destroyed due to AI developments.
We already know how AI will have a major impact on employment and on job displacement, and on how it will make businesses faster and more efficient, but other than that and some of the ethical issues, things are still unfolding.
What is not entirely known at this stage is quite how it will impact on the longevity of businesses in any particular sector.
And it is with that in mind, why it’s worth considering how AI might or could impact a business you are considering to buy.
But consider this both positively and negatively, as you may spot opportunities as well as see challenges or obstacles.
You don’t want to find yourself buying a business, which could collapse under your leadership as a result of changes brought about by AI.
If you buy a business that is using AI for its advantage that’s fantastic, but if you can buy a business that isn’t using AI, but it could do, and by doing so the AI enhances how it does things, even better.
Changes by introducing Artificial Intelligence to a business you buy could be where the opportunity lies, and this could even be the game-changer.
For example, one of the changes I made when I bought my business, was to make it more efficient by using bespoke software, as the business I bought had mostly manual systems and processes in place at the time I bought it.
By changing the manual processes to software driven processes, made the business more efficient, and it helped my employees to track things in a much better way.
For example, by using the software, they were able to track which sales person was converting the most leads, which adverts were working the best, and so on.
Using software, which is essentially what AI is, can make a business you buy more efficient and more profitable.
However, one thing to be aware of when you buy a business, is to keep an eye on how the particular business sector could be affected in a negative way by AI.
The best way to understand the impact that changes like AI can have on business sectors, is to look at how the internet massively effected the newspaper industry. Or to look at how film-streaming companies like Netflix destroyed businesses like Blockbuster.
The irony about Blockbuster was that the owners of company had the opportunity to buy in Netflix in the early days, but they didn’t, which ultimately led to their own downfall.
Be careful when you are looking to buy a business, and when you do the commercial due diligence, consider how artificial intelligence might affect the business both positively and negatively.
If during your due diligence process, you discover that AI could destroy the business at some point in the future, of course avoid buying the business.
If you have any questions on this topic about buying a business, or on any other aspect about the process involved in buying an existing business, please drop a comment below.
And always remember that no question is a stupid question, if you don’t know it, you don’t know it, and by having the answer to a question you have, might be all it takes to move to the very next step in your journey to buy a business.