This New Year, Accelerate Your Business With These Three Steps
It’s that time of year. As we tear down our decorations and bid farewell to another holiday season, we usher in New Year’s Day, and all of the resolutions that come with it. This is your time to start anew and plan ahead for the year to come. In life, you probably have a good idea of where you’d like to see yourself—maybe you’d like to save money this year, or exercise more, or maybe even travel more. But in business, what goals have you set? When it comes to your 2016 initiatives, consider preparing your organization for the next big thing—starting with putting the right strategy in place.
When it comes to the strategic initiatives of savvy organizations, there are often three crucial building blocks needed to solidify a strong foundation. The first two elements of a successful business include franchise development (new-to-industry growth) and operation support aimed at increasing the sales at existing locations (organic growth). But the third, very important component for a franchisor is sometimes a little less understood and a little more complicated—developing a mergers and acquisitions (M&A) strategy.
Strategic M&A development forces each organization to evaluate its market, address its individual needs in key areas and assess how best to stay competitive in dynamic business environments. Ultimately, the outputs from this strategic focus can yield significant value.
But when companies begin to consider the implementation of an M&A strategy, the tasks ahead can be intimidating. Like any other niche field, there is a sea of books, papers, consultants and other experts available that one should sift through when seeking guidance and ensuring success. Over the years, I’ve found that the process of strategic M&A development can be stripped down and simplified into key categories that every organization must focus on. Here are my three basic principles that can be applied to any marketplace.
Determine the “Why”
It’s a matter of human nature to want to know—and do—what others are doing, but that doesn’t mean it’s OK to simply jump into something. It’s important to first define a purpose—the “why.” In the M&A space, that purpose should be focused on providing an organization with the ability to be more relevant to its stakeholders—its customers, employees, investors, vendors and communities. Companies are always looking to acquire competing organizations to increase market share while, at the same time, decreasing competitive market share. And making your business relevant can often lead to expansion—a surefire way to put more pins on the map and to get you noticed.
For other organizations, increasing aptitudes forms a different kind of purpose for engaging in M&A—in other words, the “buy it” versus “build it” approach. These enterprises might seek out the latest technological advances or trends in their industries and choose to acquire them rather than developing competing competencies in house. This methodology boils down to choosing an approach of speed to market or spend control.