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To Consider Acquisition or to Organically Grow, That is the Question.

When you open a small business there are a few options as you continue to grow and expand your business. But navigating the strategy behind acquisition can be difficult. When is the right time? Is it a more strategic option to grow organically? Who is the company to acquire my small business?  There are pros and cons to both organic growth and acquisitions, so let’s go through a few of those to give you a greater understanding of where your business should go next.

Organic business growth is the most natural and common way, which allows you as the business owner to control how that growth will occur. You will still run into some problems, as anyone growing a business does, but it allows you to predict and regulate how the growth occurs. There are many people who wouldn’t have it any other way, as the sense of accomplishment that comes with growing your own business is extremely satisfying. 

One of the major downsides to organic growth is the time it takes to expand your business, it is typically much slower, and can even take years to plan and gather funds to grow organically. This isn’t always the case, but typically if you choose to grow on your own you are choosing to take a bit of a longer route, which will eventually lead to your business success. This can be framed as a good thing, as most businesses who rapidly grow before they’re ready to end up crashing and burning. 

While organic growth can sound extremely satisfying as an individual, there is also an opportunity to grow with a strategic acquisition. This usually is a much quicker, cheaper, and safer process and can usually create sustainable rapid growth for a small business owner. This route also allows for easier financing, economies of scale instantaneously, and incredible competitive advantages. Your company will penetrate the market at the moment of acquisition, or potentially eliminate the competition by merging with them.

There are also disadvantages to grow through acquisition, which typically deal with the change in culture and methodology within the company. If the acquisition required you to reorganize your business, within your management team and employees, it could cause added stress for you, the owner. With acquisitions the existing employees may feel betrayed or disappointed in the owners of the company. Navigating a new company culture can be quite challenging, but if problems are addressed quickly a melding of cultures can be successful.

So with all of these potential scenarios how do you choose what avenue is right for your business? As you work to understand what the next steps for your company are, remember that a well-thought-out plan is number one. Ensure that you discuss the next steps with your lawyer, business broker, and other advisors that are vital to the success of your business. Map out both options, weigh out your personal pros and cons for each scenario. You should also consider looking into businesses that are selling near you to understand what your competitors are doing and what businesses surrounding you will enhance your business or hinder your goals for growth. Once you have an intelligent plan and have considered your options, you can continue growing your business in the way you choose.
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