Businesses are a lot like life. They have ups and downs, and different phases that detail operations. The startup is the beginning of a small business’s journey, and this naturally leads to growth. Continual growth is part of a healthy business. Can mergers and acquisitions provide benefits as part of a small business’s lifecycle?
As part of the Growth Phase
There’s no question that business acquisitions are one form of growth. They’re one of the simplest and most attractive types of business growth.
Think about it for a second. Which is easier, for a company to go through the steps of opening a second location from scratch, or to purchase another business that already has personnel and operations in place? The answer is obvious.
Many small businesses looking to expand can benefit by seriously weighing the pros and cons of mergers and acquisitions. Sometimes, the other business isn’t profitable enough to be worth the effort, but other times, buying out a competitor can save business owners tons of time and headaches.
The Benefits of Acquisitions
There are several reasons to choose a business acquisition rather than expanding independently. The first has already been touched on: having an existing team in place. Many times, it makes sense to have key staff members stay on as part of the new location.
If they’re part of a successful team, there’s no reason to break up something that works well. In other words, operations continue almost the same as before, except with a different owner benefiting from the investment.
Advantages for Expansion
Another advantage is simplicity. Opening a second business location from scratch can be more time-consuming than it seems. There are countless small details to handle, from hiring staff to securing equipment. Mergers and acquisitions allow for skipping most of these steps.
It’s like the difference between the construction of a new building and purchasing existing real estate. Construction provides more customization but takes much longer and requires more oversight.
Finally, the benefits of a recognized brand name or team in the new location. The acquisition can allow small businesses to rapidly obtain a list of customers or leads that are ready to go.
Instead of spending years building up a good reputation, owners can hit the ground running. This is key for maintaining good revenue in a second location so it can support its expenses rather than relying on funds from the primary location.