When buying is better than starting

If your business has been up and running and you’re looking for a new growth strategy to take it up a notch, you may want to consider an acquisition.

Many businesses will change hands in the coming decade, as baby boomers come of age and turn their attention to exiting their business to retire.

According to ABS statistics, 28% of business owners in Australia or approximately half a million business owners are in the 55 years plus age bracket.

When you look at family and private businesses in particular, 70% of owners are over the age of 50; 50% of all owners are actively planning the sale of their business; and 59% would seriously consider selling their business if approached.

This provides a wealth of opportunities for start-ups to capitalise on the many benefits of acquisition, which include:

• Instant access to customers. Rather than organically building your customer base, buying one provides a captive market, relationships, a purchase history and statistical sales data you know and can work with.

• Entry into a new market, where you purchase a business that’s trading in a complementary segment to your existing one. Save on the cost and effort involved in establishing a presence by buying an existing one.

• Intellectual property. Businesses have knowledge, processes, trademarks, copyright, brands and websites. You can acquire this rather than develop it yourself and start using it to deliver new and improved products and services tomorrow.

• Sales and marketing systems and processes that are established and proven can be used to obtain repeat purchases from existing customers and be applied to acquire new ones. Referrals and word of mouth from an existing customer base can be harnessed to your advantage as well.

• People are the backbone of a business, and acquiring skilled talent means you can focus your energies on capitalising on the acquisition while your team keep doing what they do well, and provide ideas or a sounding board for improvements.

• Economies of scale. If you have capacity and an operating structure in place, an acquisition may provide you with the opportunity to increase revenue without the extra costs. This can lead to greater efficiency and, ultimately, greater profits.