Sarah Beth Cleaves
The secret to small business growth that NO ONE is talking about
As business owner’s we are all trekking down a similar path. Grow our businesses. Get more leads. Get more sales. Deliver more products. Hire more staff. Need more business. Get more leads. Get more sales… The cycle repeats.
Organic business growth is like a steady stream. It gets results. It allows year on year growth. The problem is the results take a while. Growth rates of 20 – 50% for small business owner are usually considered an excellent growth rate and often not sustainable year on year.
If your turnover is $2M and your growth rate is 30% then it’s going to take you 3.5 years to double your business.
What if there was a faster option available?
Growth through acquisition for the small business market is set to become the new secret to business growth.
If you had the option of organic growth or of buying another business that already had the same level of sales as you did – which would you prefer?
Providing you have what I like to call “a digestion team” in place to help merge the businesses together this strategy is by far the secret path to success.
You can invest in property or the share market and should hopefully have a nice 8-10% return over the next few years.
If you invest in yourself and business then returns and possible ROI will exceed any of the traditional asset classes available. I’ve come up with a check list to help get you started.
6 things to consider if you wanted to implement this strategy into your business plan
- How big do you want to get to?
What’s the end game? IPO? $15M business? What kind of money do you need to be financially independent. Stopping short of this figure is just short-changing yourself
- How much can you handle at once?
If you are a $2M business and you want to buy a $12M business as your first purchase then there is chance you could be biting off more than you can chew. Ensure your current team or the leadership team that is in place in the new entity is up to the task
- What type of business would make the best purchase from a strategic stand point?
Buying competitors can obviously have advantages from back office savings and doubling up of staff. You should be looking for a business that is not just a ‘going concern.’ What business would compliment your current model and could therefore provide an entire list of new customers for your current offering?
- If you need investors or funds then how much equity are you prepared to part with?
I’ve seen deals get left on the table over this one. It can be hard to part with your hard earned equity however remember the golden rule that it is far better to own 50% of something massive then 100% of something small.
- How much time do you have to dedicate to finding the right business?
If you are serious about this strategy then set aside regular time for searching. You can easily leverage your time by using the resources available on www.business2sell.com.au
They provide one of the most comprehensive listings of businesses that are currently on the market. They also can provide extensive market research reports into your suburb or chosen industry which can help take some of the grunt work off your plate.
- Who do you need in your corner to help make this a reality in the next 12months?
A strong accountant, a strong commercial lawyer, an advisory firm that has handled these types of transactions before