Last week was all about a new client who wants to grow his business. He wasn’t sure whether it should be achieved through a merger or whether it was more about organic growth.
For me, the answer is simple – both! But only when its right for the business. So, first, we need to understand where the business is now (product profitability, markets, uniqueness, cash position etc.) and how this might change over the coming months and years. What is the business good at? What are its strengths and how does it play on those strengths to its customers’ advantage?
Then, examine where the business is going. What is its vision and what is its mission for the next 12 months? Are new products going to be introduced? How profitable are they, especially compared to the current products? What new markets is the business seeking to penetrate? What investment will be required?
An often overlooked aspect is the value that a business owner brings to the table? How is their time spent in the business and what impact does this have on the business’ growth? If they are doing the doing instead of developing the business, is this the right activity for the businesses future sustainability – or should they be doing something else? Try to get things in perspective by valuing the business owner’s time, and put this as a cost of sale if s/he is involved in delivery.
This can be done in several ways. However, in a start up / growing business – add a premium to a market rate to come to a business owner’s cost for delivery purposes. If in an established business – take the net profit and divide by 226 days to come to a daily rate. Just two methods I use.
By doing this, it really puts the spotlight on the owner’s activity and helps them to prioritise between delivery and ‘other’ business matters. Having covered this ground, the business can now make informed decisions about whether a merger is right for it at this time because it can compare options in an informed manner.
We did all this in a Roadmap Day – delivered with 50% funding from a government backed Innovation Voucher supplied through Thames Valley Chamber.
If you would like to know more, Contact Us or phone 07736 105055 to speak to Matthew.