If you want to grow your business, with the aim of placing your business for sale in the future, then it may pay to look at buying your competitors. Richard O’Brien explains...

Growing your small business with an eye to its future sale is likely to be on your mind. With so many small businesses likely to be on the market in the coming years, it is prudent you get your business into shape to ensure you get your best return.

Increasing the size of your business is one way of generating your best return and having a more saleable and attractive business. 1 + 1 can equal 3 when it comes to the value of your business when it’s time to sell. It is the medium and larger businesses that command the best prices, so growing your business for this outcome is often your best option to maximise the value of your business.

Incremental sales can be a long, hard slog to building your business, so take some time to consider other options, like buying an existing business and incorporating it into your own. Acquiring an existing business will take you less time and offers other advantages, apart from the additional customers and cashflow from day one. In buying a business similar to your own you will already know the ropes and the industry, saving you valuable time in getting going. Search the market for that that suitable business acquisition, visit online business for sale sites like www.nzbizbuysell.co.nz and newspapers to identify potential business opportunities.

One of the most cost-effective and immediate ways to up-size your business is to buy your competitor. In addition to increasing your customer base there are also trained staff who understand the business and its customers, systems and potentially, a new culture. The slower alternative is to grow your business over time and with effort you can improve existing systems to increase sales, thereby creating a larger, more profitable and valuable business.

Bear in mind that business acquisitions should occur as part of a strategic plan, not just because it is available. You will need to identify long and short-term objectives, desired personal, strategic and operational goals. Develop a profile of the type of business opportunity that would best suit your needs; it can be a good idea to discuss your ideas with your accountant or lawyer.

Whichever avenue you decide to take to grow your business, build a strong plan. Identify and focus on your company’s strategic position in the market, the future prospects for your industry and your customers’ perceptions and expectations.

If you are acquiring a business to grow your own, it is important to have realistic expectations. Rarely are acquisitions and their integration straight forward easy and problem free. Remember that you seek to add real value to your business, not find the elusive magic bullet.