Now is the TimeGeneral Business
Posted by Anthony Samples on
Listen up, if your goal is to “Grow Your Business”, raise your hand. I’m sure that 99% of you raised your hand. Those of you who didn’t, well, you can stop reading.
There is no such thing as a business that is maintaining sales and profits year after year at the same level. It doesn’t exist. The hard truth is, your business is either growing or it will eventually die. There is no standing still.
There are 2 ways to grow your business, organic or strategic. Organic simply means that you grow by increasing sales and profits by internal efforts. You open more locations, develop new products, attract new customers, or increase your average sale with your current customers.
Growing strategically means that you are growing through acquiring other companies. But the fact is that if you look at the hugely successful companies in the US, almost all of them grew by using both. They were constantly improving the business model and also constantly searching for smaller companies that would add value to their operation, think Google, Amazon, Starbucks, Verizon, Coca Cola, Mars, Inbev etc.
A part of your business growth plan should be acquiring other businesses similar to yours that can add value. Growth through acquisition has much less risk than organic growth. The business that you are buying has already proven their business model: you have their P&L’s to prove that. Along with the purchase, you also receive their experienced employees. Just as important, you receive their customers. Also, the facts are that you probably already have someone doing accounting, marketing, scheduling, you may not need both locations etc. So, when you look at the P&L of the other business, you should also be thinking how much profit they could actually add to your business if you eliminated some of the expenses that would not be necessary when you combine both businesses. It goes without saying that you also get an instant boost of sales that would take years to gain if you were only growing internally.
At this point, you are probably thinking that this could be too expensive. Consider this: if your goal was to add 40% to your sales over the next year, what would that cost? Locating and opening new locations, hiring and training 40% more staff, buying more equipment? And even if you did all of this, your profit would not start to improve until sales grew to more than cover this additional expense. How long would it take for sales growth to reach a level to increase your profits? How many new customers would you have to gain to increase profits?
Now, if you grew 40% through acquisition, it is a much better process. True, there would be some integration challenges, but nothing even close to the challenges of growing that quickly by internal means.
Where can you find a great business that would add to your current business and you could acquire on very favorable terms? A recent survey by BizBuySell found that Baby Boomers who own businesses are rapidly approaching the time to sell. The survey indicated that 32% of all privately held businesses would be sold over the next 2 years. If you want to grow your business, now is the time. Many of these business owners have no debt and can be very flexible with the purchase terms. Their main concerns will be to get a fair price for their business but just as important to them will be to ensure that their employees have the option to continue working.
We cannot emphasize enough “Now Is The Time”.
How can we help? It’s what we do! We can discretely find acquisition opportunities for you, assist you with valuing the business, and guide you through the entire process. It’s what we do! Give us a call for a no obligation conversation.