Hot Topics, Cool Solutions 33: Growing Through Acquisition
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GETTING SERIOUS ABOUT ACQUISITIONDear Al,
We want to grow our company fast. The good news is we've saved enough money in the last three years to have a small war chest to make this happen. But, we don't know where to spend our money to get the biggest bang for the buck and make our company growth explode.
Giddy for Growth
Dear Giddy for Growth,
That's exciting news!
It's a lot more fun for me to advise people on how to grow the company the right way than how to survive.
The first step is to create a good marketing plan that addresses:
1. Marketing Budget: What percentage of sales will you spend?
2. Marketing Allocation: What type of marketing vehicles will you use?
3. Marketing Calendar: What marketing items are date sensitive?
The very best way I've found to spend marketing dollars is by limiting the allocation to three strong vehicles. That's because spending money on too many things dilutes the effectiveness of the marketing campaign.
Unfortunately, you need to know that even the best marketing campaign is still a gamble despite good planning and research because there's no guarantee that someone will call you.
If you want the most bang for the buck when it comes to growth, you need to get serious about acquisition. Acquiring a company provides the greatest chance that a qualified customer will call you seeking your products and services. It's also a great vehicle with the highest likelihood of getting you the calls you need to grow. Getting good at acquiring companies requires specific skills and due diligence which requires you put together a team of professionals to help. You'll need the lawyers and accountants to help give you the best chance to get what you're paying for.
What type of acquisitions will you want to pursue? There are primarily two types of acquisitions and they are:
1. Brick and Mortar: This is where you buy the physical assets like trucks, building, customer list, and keep the staff so you operate the business pretty much as a stand-alone operation or as part of your existing company. Usually, you get a better customer retention because the owner is retained and paid according to how well you keep the customers.
2. Phone Line: This is where you just buy the phone line and Yellow Pages position and don't buy any of the company's assets or retain the staff. This requires confidence that when the customers of the old company call, you'll be able to convince them to give you a try.
Either way you do an acquisition, you need to negotiate a price so you don't pay too much. The fact is either way you acquire you're likely to lose a percentage of the customers.
Typically, you'd pay more for a brick and mortar acquisition because you want the people to stay on and you want to do a very active job of getting the existing owners to communicate to their customers that they should stay an active account.
A phone line acquisition is usually bought at a great discount because it's tougher to hold the existing customers since the tendency is to shut the shop, use your company name, have your people do the work, and not have the old owners around to contact and retain their existing customers.
Both acquisition types work well if you have an experienced coach to steer you through the process.
Try these ideas and watch your growth make you giddy.
DEALING WITH AN EMPLOYEE'S ILLNESSDear Al,
I have a great manager who unfortunately was diagnosed with cancer last month. She's been working hard to finish up what she can before she goes for surgery but I don't know how long she'll be out and how I can manage while she's gone.
I know it'll sound insensitive to be worried about how we'll manage without her and whether I should go ahead and replace her right way, but how long can I wait for her return before I have to fill the position with someone else?
Suppose I do hire someone else, what do I do should she want to come back?
I'm sorry I even have to ask these questions but I need some help making these tough decisions.
What a tough dilemma!
You have to admit that if she is facing cancer and she's still going out of her way to wrap up projects and possibly train someone to fill in while she's gone that she has the company's best interests at heart. This is especially so since this is such a scary and traumatic time in her life.
Sometimes when you don't know how to proceed with employees or customers it helps to put yourself in their place. What would you expect? What would you see as fair treatment?
Wouldn't you agree that it's wrong to not discuss a possible date for her return before you go ahead and fill the position? Business does demand we keep going but it also requires that we take a longer view of things. Is filling her position so necessary right away? Can't others pitch in and help while she's gone for a while?
Eventually, you're right ... you will need to make a decision.
The fact is if you take a long view you'll see that how you treat people in their time of need is how they'll treat you in your greatest time of need. Rest assured, any extra kindness like visiting her at the hospital, salary advancement, and offering to help in any other way will not be forgotten soon. You shouldn't do the right thing for the mileage you get out of it but the reality is the other staff members will be watching and appreciating your actions.
Unfortunately, a lot of companies love to tell employees, "You're just like family." But as soon as trouble hits, they get dumped. Is that how you'd treat a family member?
Good communications is key. That means working out a plan that is fair to both you and her and putting it down in writing so you both can stick to your promises.
I'm a big believer in good karma. It seems the more good stuff you do for others, good stuff also happens for you. Take this approach and you won't be sending out an S.O.S. for long.
Publication date: 11/13/2006