Running your own business is a huge undertaking.
As a business owner yourself, you are always looking for more organic ways to grow your organisation. Ultimately, you want to make more money and serve a larger customer base. The only challenge is identifying the best way to grow your business at a healthy and manageable rate.
There is a long list of tactics, from marketing and franchising to hiring and expanding into new categories or geographies.
But what about buying another business?
If you are looking to move your business forward, you might want to consider the option of strategic growth through the acquisition of another company.
Let’s talk this option through.
Organic growth vs growth by acquisition
Organic growth follows a business’ natural progression by growing your customer base, reinvesting profits in new assets for greater income, and improving productivity to increase your bottom line.
On the other hand, inorganic growth or growth by acquisition happens through carefully considered mergers and acquisitions of brands that offer something their business model is either missing or would enhance a current offering.
The main difference between organic and inorganic business growth is that the former is within an organisation where the growth comes from internal effort, while the latter externally buys additional separate business units through a business acquisition strategy.
What is a Business Acquisition Strategy?
Strategic acquisition is a method used by companies to gain or purchase another business’ shares, property and/or assets. Acquisitions are typically made in order to take control of, and build on, the target company’s strengths and capture synergies.
I’ve seen many business owners often dismiss the idea of buying a business due to the potentially high financial risks. They also believed this strategy was only for rich business owners who have millions of dollars sitting in their bank accounts. But what if I told you that business purchases can be made without you putting your hand in your own pocket?
Yep – it’s possible.As a business owner myself, I see acquisitions as the quickest, safest and most guaranteed way of growing any business, because one purchase could double, or even quadruple the size of your company. When carefully scrutinised, this strategy can be your expressway to growth.
3 reasons why you should look into buying a business to grow your own
Businesses that are programmatic and strategic about buying other businesses tend to grow fast and achieve realistic outcomes.
Whether your company is a new business or well established, here are 3 reasons why you should consider acquiring a business over the next 12 months as part of your growth plan.
- Achieve faster business growth.
When it comes to growth, acquisitions are often a valuable strategic weapon that can accelerate time to market and efficiently capture new customers, talent, resources and product lines.
Growing your business organically takes time and requires big investments in sales and marketing. Inorganic growth by acquisition is an alternative approach that often can get you there faster and relatively cheaper.
- Buying a business is a great way of acquiring core assets.
Among the many advantages of buying an existing business, perhaps none is more important than obtaining an established workforce, operational systems and core assets.
This also unlocks access to key talent by integrating well-performing managers and employees into your business without the need to engage in an extensive recruitment and hiring process.
- Leverage synergies between both businesses.
The key to growth by acquisition is acquiring a business that has synergy with your existing business. When companies are choosing to merge together, the goal is for the whole to be greater than its individual parts.
Remember – buying a business is not only limited to buying direct competitors. It’s also common for a company to buy another to take advantage of each other’s distribution channels in order to expand their markets.
Is your business ready for growth by buying another business?
As you can see, it can be a really smart expansion strategy.
This is particularly true during the maturity phase of your business lifecycle. If you think you’re there, it’s time to map out your long-term plans and goals to continue to stay on the ideal growth trajectory.
Do you need help with your business acquisition strategy?
Adopting a growth mindset is essential for every smart business leader. This involves consistently finding strategic ways to evolve your business to the next level.
However, it can be daunting to jump into significant business decisions like this.
So, if you need help looking at your organisation to see if buying a business is suitable for you, I’m here to help.
As a Business Coach and Mentor, I work with business owners like you to guide you on the path toward achieving your business goals.
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