Why you Should Strategically Buy a Business to Grow
Why you Should Strategically Buy a Business to Grow
The fastest way to grow your current business is to acquire your competitor or a complementary business to increase your market share. This works exceptionally well if you can obtain such a business in the same area in which you already operate or a neighbouring town.
Buying your competitor is often called an acquisition when one company purchases most or all of another company's shares to gain control of that company. This can also work out beneficially if the acquired company has had some negative profit and loss statements, as these 'tax credits may be able to be utilised for the original profitable business.
As an example of acquiring an aligned business, if you own a paint wholesaler, purchasing a panel beating shop nearby that you already supply with paint would make sense. This would not only secure a regular customer for the paint wholesaler but expand in a similar field that is complementary to your current offering. In an area that you already have some knowledge of.
If you owned a retail business, it would make sense to secure another retail business that holds a lease in a tightly held busy shopping centre for you to migrate some of your everyday items into the new, higher traffic retail space and bring some of their higher selling items into your original area.
Buying a business already operating can give you a quicker path to growth and commanding the market share than organically growing your current business. It is turbocharging your success and adding immediate cash flow.
You will also learn from purchasing an existing business in the handover process, gain more qualified suppliers and acquire their customer database. It also eliminates many of the headaches involved in expanding a business, such as developing new products, hiring staff and building a loyal repeat customer base.
You will also acquire all the plant, equipment, fit-out and inventory. Setting these up from scratch is often a time-consuming, expensive, long process.
Mentorship is another benefit of acquiring an existing business to add to a current business. The existing owner is often willing to stay on for some time to mentor the incoming owner. This can be invaluable, even if you currently own a business, as you are likely to learn something still.
Acquiring an existing business in a similar field also means it already has an established name and reputation that you can continue to build on.
The most significant advantage is the instant boost in market position, and in some cases, with enough acquisitions, market dominance effectively eliminates competitors.
Tags: acquisition buying expand small business
About the author
Jasmine Robson
Specialist Business Broker
Based on the Gold Coast, Queensland, Jasmine Robson is an extremely accomplished Entrepreneur who has built several multimillion-dollar businesses ...
