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How to Maximize Growth After Acquisition
By Quiet Light
If you are considering purchasing an online business, it is important to know how to maximize growth after acquisition. After all, driving growth is an important part of realizing a healthy return on your investment. When it comes to maximizing growth opportunities, there are several important aspects to consider.
In this article we talk about:
- How to identify growth opportunities
- The importance of maximizing growth opportunities
- Effective growth strategies
- How to implement growth strategies effectively
How to Identify Growth Opportunities
The process for driving growth after acquisition starts before you even make an offer to purchase the business. If your intention is to drive growth after acquisition, it is important to purchase a business that is primed for future growth. By doing so, you are able to plan the transition more effectively, as well as execute your strategies once you fully take over operations.
Once you own the business, it is equally important to be able to continue to identify new opportunities for growth as the business matures.
“The process for driving growth after acquisition starts before you even make an offer to purchase the business.”
No two businesses are alike
There are common growth strategies across different types of businesses and industries. In addition, businesses that are at similar stages of development may have similar strategic needs.
That being said, it is important to analyze each business as its own unique entity. This allows you to identify the growth strategies that are most appropriate for that business.
No two businesses are alike. This holds true not only when it comes to the company’s potential for growth, but also for the strategies that will prove effective for driving growth.
“By understanding the unique opportunities for growth within each business, you can develop a more detailed and effective strategy.”
For example, let’s say there are two Amazon FBA businesses that inhabit the same market and are performing similarly. On the surface, it may appear that they share much in common and may benefit from the same growth strategies.
By taking a closer look, however, it becomes apparent that one company has room for improvement when it comes to its marketing strategy. The second business has its marketing strategy dialed in but suffers inefficiencies with its inventory management systems.
By understanding the unique opportunities for growth within each business, you can develop a more detailed and effective strategy.
Look at the data
From Google analytics data to Amazon seller statistics, one of the advantages of running an online business is the heaps of performance data that is available to business owners. Regardless of which kind of online business you are running, there are many different metrics to track.
With the right knowledge, this wealth of information paints a pretty clear picture of how the business is performing. It will highlight the areas that are performing well and illuminate aspects of the business that are suffering. Both are important when it comes to developing a growth strategy.
For example, let’s say that you are running a small SaaS business. By examining the data, you are able to see that your churn rate has crept up to an unacceptable level over the past several months. This, in turn, has hurt your revenue and profits.
By looking at the data and identifying the source of the problem, you are able to implement improvements to your customer service program. This, in turn, reduces your churn rate. When it comes to SaaS, customer retention is crucial.
It can be challenging for an individual or team to capitalize on each and every growth opportunity. Oftentimes, this just comes down to the limited availability of time and capital.
This creates easy opportunities for growth for a new owner, however. By expanding business operations to include new strategies, campaigns, or products, you have the ability to easily increase sales and revenue.
“What may be seen as a weakness can actually be turned to your advantage with the right combination of foresight, strategy, and execution.”
In fact, if you are seeking to purchase a business with the purpose of driving growth after the acquisition, it is wise to look for companies that have several untapped growth opportunities. What may be seen as a weakness can actually be turned to your advantage with the right combination of foresight, strategy, and execution.
Optimize existing strategies
When it comes to driving growth, you don’t always have to reinvent the wheel. Oftentimes, there are many aspects of a business’s performance that can be optimized with a more appropriate strategy.
This is where looking at the data really comes into play. For example, you can look at the performance of a marketing campaign or a product line in order to identify areas where it is underperforming. This allows you to turn that knowledge into an actionable opportunity for growth.
“Oftentimes, there are many aspects of a business’s performance that can be optimized with a more appropriate strategy.”
There are also often many opportunities for improvement within a business’s operations.
In addition to addressing weaknesses, you can also capitalize on areas where a business is performing well. Let’s say a marketing campaign is excelling. It might be worth considering expanding that marketing campaign, if possible, in order to scale up its success.
The Importance of Maximizing Growth Opportunities
There are many different reasons for purchasing a business. Most entrepreneurs, however, seek to purchase a business with the intention of driving growth. This allows them to realize a healthy return on their investment.
Before we dive into the particulars of growth strategies, let’s first take a quick look at why maximizing growth is important in the first place.
Drive revenue and profits
In the immediate term, strong growth in a newly acquired business involves increased sales, revenues, and profits. In turn, this will lead to a shorter time frame necessary to recoup the investment needed to purchase the business.
You can often drive this growth through relatively simple steps. For example, adding marketing channels such as social media platforms can be effective. Likewise, you may be able to improve your e-commerce analytics capabilities to realize untapped potential. We will go into more depth on these topics later on.
Increase the business’s value
While increasing revenue and profits is an obvious benefit of driving growth, it is not the only reason to do so. In fact, for many entrepreneurs, the majority of a business’s value comes when they sell it.
Many times an individual purchases a business with the sole intent of reselling it at a greater price down the road. With this strategy, the business can be seen as purely an investment. In order for this to work out, it is necessary to drive growth to increase the eventual sale price of the business.
Gain more clarity
Developing a growth strategy also helps to bring more focus to your business operations.
By analyzing your growth opportunities and setting clear priorities, you are able to more effectively direct your limited time, energy, and resources. This leads to smarter decisions, less time wasted, and a more streamlined operation.
In turn, this removes much of the guesswork from your day-to-day operations and leads to more consistent performance.
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By planning ahead and executing a growth plan effectively, it is possible to realize a significant return on your investment.
In order to be successful, though, it is important to be able to first identify opportunities for growth within a business.
Effective Growth Strategies
Regardless of which kind of business you are running, there are many different types of strategies to consider. Each concept can be broken down into smaller and smaller strategies to address a specific need. It’s helpful to group these business growth strategies into several different categories, including:
- Renegotiating the supply chain
- Optimizing conversion rates
- Diversifying revenue streams
- Diversifying marketing channels
- Optimizing marketing channels
- Earning repeat customers
- Managing your inventory effectively
While some of these strategies may apply to specific business types, others may apply to a wider range of businesses and industries.
Renegotiate with your suppliers
If you are managing a physical-products business, such as an Amazon FBA business or a Shopify store, your supply chain is an important aspect of your operation.
In addition to ensuring your supply chain runs smoothly and efficiently, you also want to pay attention to the terms you have with your suppliers. At times, it is possible to negotiate new terms with your suppliers in order to become more profitable.
For starters, many businesses negotiate terms with their supplier when the business is just starting. Depending on the amount of capital available during the initial phases, the initial order size will likely start out quite small. In this scenario, the business owner will have less bargaining power with the supplier than a larger company might.
Over time, however, this can change. As your sales increase and you start to place larger and larger product orders, you may become a more important customer to your supplier. As this happens, you could have the opportunity to renegotiate the terms of your relationship.
This may include revisiting the price you pay per unit of inventory. If the supplier packages and ships your product as well, the price and terms of these services can also be reevaluated.
If you are looking at purchasing a company, it is advisable to look at the terms that they currently have with their supplier. Any contracts that haven’t been renegotiated since the company was founded may be able to be renegotiated.
“At times, it is possible to negotiate new terms with your suppliers in order to become more profitable.”
Optimize conversion rates
Improving your company’s conversion rates is a high-leverage way to drive growth. Even a small increase in your conversion rate can lead to a significant increase in new customers.
The specific strategies you should use to increase your conversion rate depends on the type of business that you are running. For example, if you are managing an Amazon business, you can seek to increase your conversion rate by improving your product listings. This may include using professional product images and optimizing the description and title of your product listings.
“Improving your company’s conversion rates is a high-leverage way to drive growth.”
If you run a Shopify store or are selling products from your own website, you may consider streamlining your checkout experience in order to improve your conversion rate.
Diversify revenue streams
One of the most effective ways for driving growth is to diversify your revenue streams. Again, the way in which you do so depends on the type of business that you are running.
If you run a content site or a blog and most of your revenue comes from advertising, you may want to consider launching a digital or physical product line. If you run an Amazon business, consider adding a new product to your lineup.
There are many different ways to diversify your revenue streams. See what opportunities are right for your business at the stage it is currently in.
“One of the most effective ways for driving growth is to diversify your revenue streams.”
Diversify marketing channels
Diversifying your revenue streams by adding products can be a great move. Additionally, you may also want to diversify your digital marketing efforts. Depending on the stage of your business, it is likely that there are many untapped marketing channels waiting to be utilized.
Look to see what marketing channels you currently use, and then assess what other channels may be appropriate for your business. By adding affiliate marketing, paid advertising, or a solid content marketing strategy to the mix, you may be able to rapidly increase sales and revenue.
Optimize marketing channels
It is possible that there is significant room for growth simply by optimizing your existing marketing channels. Start by going through your current marketing efforts and analyzing the performance of each channel. By doing so, you can identify areas that have room for improvement in order to improve customer acquisition.
Additionally, you can seek to better understand your target market in order to improve your performance.
For example, let’s say that you are engaging in paid advertising on YouTube and Facebook. Your campaigns have been profitable up to this point. With a few small tweaks, you feel confident you can improve them further.
At this point, you may want to consider investing more heavily in these campaigns. While this does take more capital, it may be a worthy customer acquisition strategy.o If you don’t have the capital on hand to fund the increase in ad spend, you could always consider using a small business loan.
Earn repeat customers
An often-overlooked business growth strategy is to sell more to your existing customers. If they made a purchase from you previously, there is a chance that they would do so again in the future. Customer loyalty is paramount.
This is easier for certain business models than for others. For example, on Amazon you do not own your customer information, making it difficult to follow up with them for future purchases.
However, if you run a Shopify store, SaaS business, or content site, you have the ability to collect your customers’ information. This allows you to stay in communication with them via email marketing regarding future offers or deals. By developing a healthy email list and nurturing your leads effectively, you can unlock a loyal and growing customer base. Each person on your email list is a potential customer.
Manage your inventory effectively
If you are running a physical-products business, it is important to manage your inventory effectively. If your business inventory cannot keep up with the number of orders that you are receiving, you are losing out on easy revenue.
Start by correcting your inventory issues so that you can effectively and efficiently fulfill all orders. This will help you drive growth in the short run and create happier customers in the longer term.
Regardless of your business’s stage, it is likely that there are several aspects of your operation that can be improved. Doing so can often drive significant growth.
“If you are running a physical-products business, it is important to manage your inventory effectively.”
How to Implement Growth Strategies Effectively
Identifying growth opportunities doesn’t mean much if you can’t capitalize on those opportunities to drive real growth. In order to do so, you must develop an appropriate strategy and implement it effectively. There are several steps that are necessary:
- Establish your budget
- Set your goals
- Prioritize strategies
- Analyze and refine
Establish your budget
First and foremost, you must develop an accurate picture of the resources available to you. It is important to be realistic. Depending on your budget, certain strategies may not be feasible in the short term. These strategies, however, could be implemented down the road when you have a larger budget.
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Fortunately, there are many things you can do to drive growth that do not require a large budget. For example, you don’t necessarily need to spend any money to renegotiate your supplier relationships or make use of an existing customer email list.
Setting clear goals is equally as important as determining your budget. Your goals should be in line with your larger strategic objectives as a business.
Of course, one of the most obvious goals would be to expand revenue, but you could also focus on minimizing costs, growing your email list, or developing brand recognition.
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Your goals should be specific, measurable, and achievable. Again, be realistic about what you plan to accomplish with the resources that you have available. Your goals will help determine which strategies are right for your business at the current time.
“Your goals should be in line with your larger strategic objectives as a business.”
Prioritize your strategies
Once you establish your budget and set your goals, it is important to look at all available growth opportunities that lie before you. Some will make sense to implement, while others won’t. Likewise, while two strategies may both work to get you closer to your goals, one option may be superior to the other, either by being more effective, requiring fewer resources, or both.
Go through the strategies available to you and set clear priorities about which ones you will implement now and which ones you will implement or consider later on down the road.
All the planning in the world does not get you anywhere without successful execution. Of course, how you implement your strategies will depend entirely on which strategies you are using.
It is possible that you will have the time and expertise to implement the changes on your own. If you are running a joint venture, it is possible that your partner will have the skills necessary to implement your chosen growth strategies.
Some improvements may require you to hire outside help or build out a new team in order to manage the efforts. Of course, the costs and benefits of implementation must always be weighed.
Analyze and refine
Running a business is an ongoing process. As such, an important aspect of any growth strategy is the ability to analyze performance and refine your approach as you move along. Without this component, all your efforts could be wasted.
For example, if you launch a new paid advertising campaign, you should track many aspects of the campaign’s performance, from ad clicks all the way through to the point of sale. By doing so, you may be able to identify a point along the customer journey that is underperforming and take appropriate corrective action. This may allow you to turn a failing ad campaign into a huge success.
“…an important aspect of any growth strategy is the ability to analyze performance and refine your approach as you move along.”
Purchasing a business represents an exciting moment in any entrepreneur’s life. With it comes the opportunity to transform your work-life balance, increase your freedom, and change your financial picture for the better.
In order to maximize the benefits of a new business purchase, it is crucial to have a clear growth strategy in place prior to making an offer on a business for sale. By understanding the benefits of driving growth, knowing how to spot growth opportunities, and having a clear idea of how to implement specific growth strategies, you can set yourself up for post-acquisition success.