{"id":1232,"date":"2021-04-07T20:42:48","date_gmt":"2021-04-08T00:42:48","guid":{"rendered":"https:\/\/nexusbusinessassociates.com\/site\/?p=1232"},"modified":"2021-04-07T20:42:48","modified_gmt":"2021-04-08T00:42:48","slug":"should-you-buy-your-biggest-competitor","status":"publish","type":"post","link":"https:\/\/nexusbusinessassociates.com\/site\/suggested\/should-you-buy-your-biggest-competitor\/","title":{"rendered":"Should You Buy Your Biggest Competitor?"},"content":{"rendered":"
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Organic Business Growth vs. Growth Through Acquisitions<\/h2>\n
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Growth through acquisition is a very viable option for small and medium-size businesses. Should you buy a business?<\/p>\n

We routinely hear on the news about huge companies merging with and acquiring other huge companies in deals measured in the tens of billions. But just a few minutes of research will show even novice entrepreneurs that growth through acquisition is a very viable option for small and medium-size businesses as well.<\/p>\n

The question is, is it the right growth strategy for your company? Or are you better off expanding in more organic ways – by opening up satellite locations, franchising, or focusing exclusively on aggressive sales and marketing tactics?<\/p>\n

There\u2019s an interesting conversation to be had around this topic for every unique business situation, and there\u2019s truly no \u201cright\u201d answer that fits every circumstance. Let\u2019s look into some of the pros and cons of growth through acquisition versus more organic business growth so you\u2019re in a better position to make that decision yourself.<\/p>\n

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The pros of organic business growth<\/em><\/h2>\n

Growing your business organically – in the most natural, progressive way possible – offers the most control over how that growth occurs. That doesn\u2019t mean you\u2019re going to completely avoid unexpected setbacks or even the stress of \u201ctoo much success\u201d at times. But, generally speaking, if you\u2019re focused on continually improving your marketing efforts, improving your product or service, and identifying new or more profitable markets you can successfully enter, you\u2019re going to find that growth is more predictable and controllable over the long term.<\/p>\n

There\u2019s also a real sense of pride and accomplishment that comes with growing a business from the ground up with your own (and your team\u2019s) efforts to account for its success. Many entrepreneurs couldn\u2019t imagine doing it any other way.<\/p>\n

The cons of organic business growth<\/em><\/h2>\n

The biggest potential negative aspect of relying on strictly organic growth is that it\u2019s usually very slow. It may take years for the market to evolve enough – and for your business to be able to afford – to justify a second location or expansion into a new geographic area. Getting to the point of opening a third location will probably take less time than the second one did, but it could still require years of planning and effort to get there.<\/p>\n

This isn\u2019t a hard-and-fast rule, of course. There are plenty of examples out there of restaurants, clothing stores, and specialty service businesses that seemed to appear out of the blue and suddenly explode across the map as they took over the market. But oftentimes, apparently explosive expansion – when it\u2019s sustainable – is actually far more controlled and organic than it appears from the outside. And there are plenty of other stories of companies that went after aggressive organic growth and ended up biting off more than they could chew, collapsing before they could realize the rewards of the strategy.<\/p>\n

The pros of growth through strategic acquisition<\/em><\/h2>\n

Unlike slow and steady organic growth, growth through acquisition or merger is generally much faster and – if done right – can yield a number of other almost instant benefits that can help make that rapid growth sustainable.<\/p>\n

David Annis and Gary Schine, authors of the book, \u201cStrategic Acquisition: A Smarter Way to Grow a Company,\u201d explain the benefits of acquisition this way:<\/p>\n

\u201cGrowth through acquisition is a quicker, cheaper, and far less risky proposition than the tried and true methods of expanded marketing and sales efforts. Further, acquisition offers a myriad of other advantages such as easier financing and instant economies of scale. The competitive advantages are also formidable, ranging from catching one’s competition off guard, to instant market penetration even in areas where you may currently be weak, to the elimination of a competitor(s) through its acquisition.\u201d<\/p>\n

So this method of growth offers a two-fold growth process:<\/p>\n

Grow your company\u2019s market, brand reach, audience, sphere of influence, and supply chain while also eliminating or overtaking your biggest competitor, either by acquiring them directly or by acquiring one or more smaller competitors until your company is the largest in your competitive market.<\/p>\n

The cons of growth through acquisition<\/em><\/h2>\n

Growth through acquisition is rapid and can yield quick results. But the internal atmosphere that develops in the time immediately preceding and following an acquisition or merger can present a number of management challenges that could hinder that rapid growth or plant the seeds of future failure.<\/p>\n

If the merger or acquisition requires reorganizing of the workforce and\/or management team in one or both companies, you may have a significant amount of stress and hard feelings to work through in the minds of those who stay. There can also be a latent sense of betrayal or disappointment on the part of employees, partners or owners of a company that has been acquired, especially if they agree to the arrangement because they\u2019re facing a do-or-die situation.<\/p>\n

Merging two distinct company cultures and methods will always present challenges, but a successful acquisition needs to get through these and other potential problems quickly and effectively if it\u2019s going to successfully grow and evolve from the process.<\/p>\n

How to choose what\u2019s right for your business<\/em><\/h2>\n

The question of whether to buy your competitor or open up a satellite location – \u00a0to grow organically or inorganically – must be answered individually by each business owner based on their own unique circumstances.<\/p>\n

In both cases, thorough, strategic planning is required to ensure growth is both attainable and sustainable over a long enough period to achieve the company\u2019s goals and justify the expense and effort required.<\/p>\n

It\u2019s usually best to explore both options thoroughly before heading too far down either path. Discuss your options with your lawyer, business broker and other trusted advisors to make sure you\u2019re considering all the pertinent details.<\/p>\n

Keep a sharp eye on your competition – both large and small – and look for where synergies can be identified or created so that a merger or acquisition creates added value for everyone involved.<\/p>\n

Once you\u2019ve done your due diligence and you\u2019ve settled on the best path, move ahead decisively. \u201cLuck favors the bold,\u201d as they say, and business growth certainly follows that axiom.<\/p>\n<\/div>\n<\/div>\n<\/article>\n

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Organic Business Growth vs. Growth Through Acquisitions Growth through acquisition is a very viable option for small and medium-size businesses. Should you buy a business? We routinely hear on the news about huge companies merging with and acquiring other huge companies in deals measured in the tens of billions. But just a few minutes of […]<\/p>\n","protected":false},"author":2,"featured_media":1233,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[11,18,2],"tags":[],"class_list":["post-1232","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buyer","category-buyer-page","category-suggested"],"_links":{"self":[{"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/posts\/1232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/comments?post=1232"}],"version-history":[{"count":1,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/posts\/1232\/revisions"}],"predecessor-version":[{"id":1234,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/posts\/1232\/revisions\/1234"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/media\/1233"}],"wp:attachment":[{"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/media?parent=1232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/categories?post=1232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nexusbusinessassociates.com\/site\/wp-json\/wp\/v2\/tags?post=1232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}