WHAT STATE IS YOUR BUSINESS IN?

AUTHOR

Bruce Coudrey

Your business is in one of three possible states.

It is either:

GROWING

STAGNATING

DYING

YOU HAVE THE POWER TO CHOOSE WHICH STATE YOUR BUSINESS IS IN... AND WHERE IT GOES FROM HERE

A business owner has the ability to decide which of these states it sits in, and where the business goes in the future. Why would you choose to stagnate, or for your business to die? Surely we all want to grow our business.

So how do you grow a business?

From our point-of-view you have these options: - grow through expansion of your existing business - grow through "head-hunting" - either staff, clients, or suppliers - grow through marketing and advertising campaigns - grow through acquisition   It can be argued that the best way to grow is through acquisition. Strategic acquisition. This is where you identify the opportunities in the marketplace, and go out and acquire a business which not only delivers a proven level of profitability, and cashflow, but also gives other benefits. These may include: - critical mass, and economies of scale - higher profile - the ability to lower overheads by consolidating operating costs - the acquisition of talent - the acquisition of IP which can be employed elsewhere in the business - an uplift in overall value which exceeds the 'sum of the parts"   This last point is interesting. An example of this scenario is a case where a transport company acquires another transport company. The acquiring company may be valued at $20 million, and the company acquired may be worth $5 million, but the combined value may be more than $25 million, as the acquiring company can reduce admin staff, run more efficient routes, and enjoy better buying power, providing better profits, and a better market capitalisation rate (multiple of earnings).   The choice is yours. You can grow, you can stagnate, or your business can die. Which do you choose?