Is There a Fast Way to Scale a Business?

For business owners who have built their businesses from scratch, the answer is probably a clear NO. Anyone who has built a business from the bottom up, knows that a successful business is usually a result of years of toil, iterations and bouncing back from setbacks.

However, the question is, is it possible for a business owner to improve scale and profitability, in a fraction of the time that it takes to build a business? 

The answer is YES.

Remember, I’m claiming that you can scale fast. Fast doesn’t mean easy - or simple for that matter! The method that I am referring to is quite simply “Acquisition”. Acquiring an existing business and merging it with yours.

Last year, a client of ours who had ambitious expansion goals, undertook this exact strategy. We determined that acquiring an existing competitors business, made a lot of sense for them due to the following reasons:

- It could achieve economies of scale

- It would open up a new market for them

- It could reduce their supply chain cost

- It would provide them with the ability to offer two additional services to their existing clients.

If facilitated and executed properly, the above benefits could speed the growth of revenue, and very likely also enhance their business valuation.

We worked with the client to formulate a plan which would involve:

1. Identifying the attributes of an ideal business for acquisition

2. Identifying the intermediary parties who would have a list of these ideal businesses

3. Drafting a non-binding letter of intent 

4. A due diligence checklist

5. Putting together a list of business and acquisition terms

6. Working out a financing strategy

7. Work on a transition plan post acquisition.

Assumed to be the exclusive domain of corporations, the fact is that acquisition of an existing business (when done correctly), can be a very efficient way to add digits to the bottom line of a small to medium sized business. 

For ambitious business owners, who are not deterred by arduous sweat labor in the short term, the ability to build equity in a business without putting in long-term sweat equity, the rewards of acquisition can be sweet.

Ron Malhotra | Advisor & Mentor to Ambitious Professionals, Visionary Entrepreneurs & Business Owners