Growth through acquisition has tremendous advantages for small and medium businesses. Most of the time, we only hear about big companies buying out other big companies, but this is also a viable option for smaller or newer businesses for expanding market share and rapid growth. Acquiring your competitors lowers your competition and immediately increases market domination, often putting upward mobility on pricing and profit margins. Business owners should assess whether Acquiring other companies is viable,, but don’t rule out acquisitions just because you’re a small company.
How to Compare Organic Growth with Growth by Acquisition
Normal business growth or “organic growth” is the most natural way to grow your business and offers familiarity and comfort zone status. There is a sense of accomplishment from building your company from the ground up with your team efforts. This doesn’t mean you won't have any setbacks or stress from failure or even success. But organic growth always will be the good old fashioned way to grow with both hands on the wheel.
Organic growth, although stable and controllable, can also be prolonged. Market evolution can take years for your business to even afford to expand to a new location or geographic area. Opening the third location may be faster than a second but still takes time and effort to execute. This isn’t a solid rule, though. There are plenty of businesses that get big and dominate more rapidly than others. And sometimes businesses explode and end up going more extensive than they can handle and dying out before they can reap the rewards of their expansion.
Pros and Cons of Strategic Acquisition
Strategic acquisition takes lots of thought and planning, but is faster than slow and steady organic growth. If done correctly, a merger or purchase can show instant benefits to your business that can help make rapid growth sustainable. Growth through acquisition can be fast, and sometimes even less risky than average organic growth. The competitive advantages are also formidable, from catching your competition off guard to instant market penetration. Your pace of growth likely increases as you eliminate competitors in your market.
Growth through acquisition, although rapid, can bring its own set of problems. Immediately after a merge, there can often be internal management problems that need to be faced and can hinder rapid growth from the recent acquisition. If you have to reorganize the workforce in one or both companies, you may have employees harboring stress or bad feelings about merging, creating a less than efficient workplace.
Knowing What’s Right for You
As a business owner, making decisions as big as strategic acquisition can be very hard, especially when your decision can decide the company’s fate. How do you know what growth strategy is right for your business? Your answer should be based on your business’s unique circumstances. In both instances, you will need extensive planning to ensure that the growth you are looking for is both attainable and maintainable to justify the expense and effort. It’s best to explore both options for your company and work through the setbacks both would bring to the table. Decide whether the option you want to take will help or hinder your goals. Once you have made your decision, move forward and execute your plan decisively.
How VC Strategic Can Help
VC Strategic is a business acquisition and consolidation expert. We can take care of all the little things inside and out. When considering what decisions are right for your business, look to our team of experts to help guide you to booming success. We can help you craft a growth plan to provide the best profits for your business or company. At VC Strategic, our mission is to help 8-figure diggers strike gold through strategic execution.