You have been operating your business for many years and now it is at a critical stage. Do you invest more money in the business to take it to the next level, keep it the same size and coast or buy a business to jump start the growth. In fact, the acquisition may be cheaper than trying to develop that new business yourself. Which way is the best choice for you?
Let’s look at each option. If you do nothing, you risk that over time, you will start to lose customers and your business will decrease. Doing nothing keeps the status quo but this may only work for a period of time. I am aware of a company where they had no new customers in 10 years. They had no one in sales and they were servicing their existing customers. As time went on, the customer needs changed, some were acquired, some decided to no longer outsource that particular task therefore the business was starting to lose customers. At one time, ten years ago, they were very profitable. Now they are losing money. Even though the signs were there, the owners of the company decided to do nothing, they were involved in other things and took their eyes off the business until it was too late. The company is at a new pivotal point, continuing or being pushed to the point of no return. That was because no one was thinking of the future, they were happy to enjoy the profits in the short term and operated without a long term survival plan of action.
If you grow the business yourself, you do not know how long it will take to reap the success of your efforts or how much it will cost you. In fact, you do not know for certain if your efforts will be successful. This may be the cheaper way to expand the business if you are successful but if you tried and failed, then tried a new strategy and it failed, were you further ahead or not? Did the continual failure of efforts take its toll on the financial health of the business?
If you acquired an existing business, you overcame the risk of will the strategy work, if you purchased a viable business. You also were able to quantify the cost of the growth and the rewards are instantaneous when you take over the new business. Buying a business may be cheaper in the long run than trying to develop the business yourself.
It comes down to are you a risk taker, do you want to risk failure or buy an existing business and get a sure thing?