Acquisitions Might Be the Way to Grow Your Business to the Next Level… If you and your team do the right things right
You own a business. You want to grow it to the next level. You see opportunity everywhere. You could elect any of the following 4 strategies to get growth. Know the facts to see which is right for your business.
- NEW MARKET Take your products into a new market place.
- JOINT VENTURE Pitch the idea of embedding your solutions into a bigger brand’s product offering.
- NEW OFFERING Build a new solution for your current market.
- ACQUISITION Buy any of these options by acquiring or joint venturing with a company that has what you don’t have.
Yes. The right answer depends on what your end game is and the capability of your team to execute the plan. Here’s a quick primer on what you need to have before getting married to your new direction.
1. NEW MARKET This option always seems attractive. “If they like our product in this industry, they will love us over in that industry.” This option to be like stepping into a bootstrapping, entrepreneurial adventure: you will be the new kid on the block with an unproven and untested product. To evaluate if this is a worthwhile direction, you need to be able to answer yes to each of these statements.
- Do we have the people on board who know this new industry and have good connections.
- Do we understand the problems that industry has that our technology or solution can easily fix in its current form.
- Do we have the financial resources to put at least two years of effort into finding the first customers and proving it works satisfactorily so that they will be a reference customer for us.
- Does our team have the skills and experience to design and manage a pilot project to prove it works in collaboration with this customer.
2. JOINT VENTURE Piggy backing on the success of name brands can be a lucrative way to get your solution into distribution channels. You don’t have to build and manage those channels, your partner has done it for you. Make sure you can answer yes to these statements.
- Our product or solution solves a problem for the joint venture partner’s customer that they have demonstrated they are motivated to spend money on to resolve.
- Our product provides the next evolutionary step (not revolutionary step!) for the joint venture partner’s product and they have clearly made the decision that they do NOT want to develop this next step themselves.
- Your team has the skills and abilities to train and mentor their sales team… who is also motivated to sell your product.
- Your team knows how to collaborate with external partners. There is more to this than meets the eye. Joint venture partners are often the first step toward a merger or acquisition if the promised benefits at the start materialize. Read Tanya Rapacz blog post to get your partnership started on the path to success.
- Recognize that it may take 18 months to three years to realize a return on this investment. Do you have the financial bench strength to go the distance without worrying it’s not working the way you had hoped or searching for whom to blame that isn’t happening in the time frame you expected?
3. NEW OFFER TO EXISTING MARKET Your target market already loves what you do for them. Give them more right? Sometimes that is a good call. Make sure you can answer yes to these statements.
- Your customers have identified a problem or need explicitly to you and have stated willingness to spend on a solution.
- Your team has the skills and abilities to develop new products, pilot them and road test them.
- Your new product will fit well into your current sales system and your sales people have the experience level to represent it properly to current customers.
- You have a willing customer or two ready and willing to pilot your new solution.
4. ACQUISITION Buying your way into a new market always seems like a good idea. The company you are acquiring already has the issues we describe as important in points 1 and 2 above. What could go wrong? Plenty. Make sure you can say yes to these statements.
- Our team is ready to acquire and integrate a new business into our current processes and practices.
- The accounting department knows how to integrate finances and IT systems.
- We can afford to dedicate the right number of full time resources on the integration of the acquisition or, if leaving the business to operate independently, you can afford the full time management of that acquisition.
- All the points from number 1 (New Market) and 2 (Joint Venture) above are satisfied.
NONE OF THESE OPTIONS WORK FOR YOU?
As a business owner, if you can’t answer YES to these questions, chances are you will not make any decision to move forward. Which may mean that growth will continue to elude you. But it doesn’t have to be that way!
If you’ve determined that taking any of these steps is beyond your resources right now, is there still a growth idea hiding in the weeds? Yes.
GROW YOUR OWN MARKET PLACE. FIND AND CONVERT MORE FANS
Sometimes, the best decision is to grow the pond you already play in. How?
- Don’t think like a competitor and copy what they are doing. Read Blue Ocean Strategy.
- Learn more about what your current customers like and dislike about doing business with you. Find and fix THEIR hassles. That ability will become your company’s secret sauce and the key to competing on your terms.
- Uncover what problem or need they really want to resolve working with. Often you will discover they need more from you and are willing to pay for it.
- Raise your prices by 1-2%. Don’t change your costs. That extra % won’t be noticed and the additional sales revenue will go straight to your bottom line.
Been through one of these market expansion strategies before? What’s your lesson learned about growing into new markets or via joint venture and/or acquisition? Leave your comments here or ask a question.
If you want to sort our your best options from all your opportunities, let’s talk. You can schedule a 30 minute consultation or book a session with us. Ask us about how to get your copy of 6 Steps to Becoming a Profitable Go-To Business