Sunday, 17 December 2017

Information and commentary for the small business banking industry

Buying a business to grow a business

23 Nov

Striving for growth doesn’t necessarily mean becoming a multi-national corporation – a growth plan may simply be a strategy for staying profitable for as long as someone wants to run their business.

Acquiring another company is one of the simplest ways to do this. Purchasing a company can be a smart move if a business owner understands the industry, has done their due diligence and has the funds available. Whether it’s buying out the competition, a supplier or a customer, a strategic purchase is often worth considering.

Buying a competitor is the most common acquisition. It appeals because it means the new owner will get access to the competitor’s customer base, staff, location and any supplier contacts or contracts. Odds are the competitor has unique strengths the existing business can benefit from. New and diverse markets open up, as well as providing more value to customers. And, because they already know the industry, acquiring a competing business should be a safe investment if everything checks out once due diligence is complete.

Buying a customer is another common purchase. Look for a well-run operation that will make for an easy transition. If the new owner can retain management and staff and keep operations running smoothly, they’ll be able to focus on leading their acquisition to new profitable directions.

The below article looks at the benefits of buying a business as opposed to a start-up – also a good option since all the difficult start-up work has already been done.

Read the full article at: www.fastcompany.com

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