| Sales Growth. Every business needs sales growth. | | | | some of the pros, cons associated with growth |
| When the company bottom line is lacking and | | | | through acquisition and through organic efforts. |
| cash flow is deficient a business owner may pour | | | | Sales growth through Acquisition and Organic |
| through his/hers monthly financials or | | | | efforts Pros/Cons - When acquisitions are truly |
| spreadsheets reviewing line entries to find out | | | | synergistic the effect on your bottom line can be |
| where the business is and to find any glaring | | | | significant. Even when considering the acquisition |
| problems. Most often this analysis results with the | | | | cost of money consider the following. If you sell |
| same outcome. INCREASE SALES or DECREASE | | | | Yellow Widgets and your sales are $10,000 a |
| EXPENSES. | | | | month - you may have the monthly cost of |
| I, and many other business owners, recognize | | | | business to sell those widgets including a building, a |
| that reducing expenses is always a good thing, | | | | telephone, insurance, advertising, company car, |
| and during an economic downturn such as the one | | | | receptionist, etc -cost totalling $6,000 per month. |
| we are presently experiencing it is more than | | | | You decide to buy a local competitor that sells |
| necessary. But my experience is that you can | | | | Red Widgets and his sales are $7,000 per month. |
| only reduce expenses so much. It helps your | | | | He also has similar cost of business- you may find |
| situation month after month to attempt to | | | | that you may increase your sales now to $17,000 |
| reduce your expenses to improve your bottom | | | | and you no longer need his building, phone, |
| line, (and is a great business discipline), yet at | | | | company car, and receptionist. Even considering |
| some point you get to the place that you cant | | | | the cost of money for acquisition- you probably |
| really reduce expenses much more, YOU NEED | | | | have increased your bottom line virtually |
| TO GROW SALES. | | | | overnight. So immediate sales increase is a plus - |
| Sales growth also occurs across many different | | | | But consider: |
| efforts, but these different efforts can be | | | | Handling/managing a big bump in sales "overnight" |
| simplified to categorize sales growth as: | | | | can be a daunting task and business can be lost in |
| Internal Sales Growth (or referred to as organic | | | | transition and may need to be factored into the |
| growth) Growth through Acquisition | | | | acquisition decision analysis. The customers of the |
| Companies may tend to use just one of the | | | | "other" company are used to doing things in a |
| above means, or both of them. In my last | | | | different way. Your way may be an improved |
| business our sales growth came through a | | | | way, but the difference may be detrimental in the |
| combination of both internal growth and growth | | | | eyes of some acquired customers. Financing the |
| through acquisition. Both means have advantages | | | | acquisition can be difficult- Financing through the |
| and potential disadvantages. But both should be | | | | Seller is usually easiest, and being they are in the |
| considered. The longevity of the business may | | | | business- they can better understand and see |
| also dictate what means to utilize for sales | | | | where the money is coming from and the |
| growth. Speaking from personal experience of | | | | likelihood of payment. |
| growing and running a business for 20 years here | | | | Acquisition can grow sales at a much higher more |
| are a few of my findings. | | | | immediate rate. You gain the benefit to the |
| In the early years annualized sales growth of high | | | | bottom line "today". In current economic times |
| double digits and or low triple digits was very | | | | Acquisitions may be had at more favorable |
| attainable through internal growth. But as your | | | | multiples of earnings. Organic growth - the |
| sales grows and your year over year | | | | customer is "brought along" with your company |
| comparisons are based on higher sales numbers | | | | philosophy, approach ,and methods and have a |
| attaining the higher sales growth figures became | | | | certain "comfort factor" with this approach. |
| more difficult. So acquisitions helped support our | | | | Organic growth rates may decline as the maturity |
| internal growth efforts. Efforts for internal growth | | | | of the business grows. Organic growth adds to |
| never stopped, they just got supplemented with | | | | the stability of the company. If acquisitions are |
| strategic acquisitions. Recognize that acquisitions | | | | not available the company can rely on own |
| that are synergistic in nature can have some | | | | internal efforts and have control of those efforts. |
| tremendous results on your bottom line. | | | | Acquisitions for most businesses should be |
| A poorly performed acquisition can also have the | | | | considered. Organic growth can be more "slow |
| opposite result and can be very costly to the | | | | and steady", but "slow and steady" with a surge |
| business. Where do you look for potential | | | | here and there can be a beneficial company |
| acquisitions? Competitors are always the first best | | | | business model towards fueling business Sales |
| place to keep your eyes open to. Below are | | | | Growth. |