How to accelerate your Business Growth. Don’t Hire -Aquire
As a small business owner, you want to grow your business. While doing so you also want to grow your personal wealth. Smart businesses are all after the most efficient, quickest and cost-effective path to grow.
How will you grow your business? Are you ready to grow your business?
A good question to ask yourself is - what you would do if you had $500k - $1million dollars to grow your business. Can you answer the question immediately?
Can you come up with 10 ways to grow your business with $500k? If not, it’s time to brainstorm some growth ideas.
For some businesses, this may mean:-
Recruiting more specialised staff or spending more money on marketing.
What about growing through an acquisition?
What other companies are similar to yours that have skills, resources, equipment, processes or staff that would complement your business and rocket your grow. Consider buying a competitor with a similar business. Do you know who they are? Could you find out?
Let’s look at a simple example -
Say you borrow 1 million dollars to buy another business. Would there be more potential for this new combined business to grow?
Consider the different potential of hiring an employee for $80k + on costs and liability or borrowing $1 mill to acquire a suitable business that would cost you 5% - say $50k PA or around $3k /month after tax.
What have you achieved? Well for starters it will cost less in cash flow and you have increased the value of your business by at least 1 million with some more brainpower and you may even be able to rationalise costs in this combined new entity.
e.g. you don't need 2 offices 2 printers 2 receptionist etc... Also, what can you now outsource to cut cost? I’m sure you get the idea.
In no time you will have reduced expenses by at least $3k per month which is your net cost for this example acquisition. With this new profitable streamline entity, you can now develop some serious growth strategies and increase your market share.
In this simple example, yes, a faster growth strategy than hiring new staff but certainly not without risks. But that’s what businesses do, manage risk and growth.
The market conditions (lower corporate valuations and low-interest rates) make an acquisition strategy a serious consideration for well-run businesses. Over the next few years as businesses models develop and change companies that take advantage of technology and improved processes and cheap money will grow fastest.
At BlueKite Business Advisers we are serious about helping business owners grow their business for maximum valuation and protect their personal wealth.