If you’re considering an expansion or merger, sit down, take a few deep breadths and read this article. You may thank me later to either move ahead, or not. These are some of the things to think about.
WHY DO IT? Make sure your rationale is clear, objective, understood by all, and feasable
- Critical mass? – You want to make a bigger footprint or imprint in the marketplace
- Diversify or balance the cycles? – Convert a limited or seasonal business to full year-round offering
- Dominate an industry or market ?– Create a major position over your competition
- Reduce the cost of doing business? – Improve the productivity, efficiency
- A blocking strategy? – Prevent your competition from moving in or expanding
WHY IT MAY NOT WORK? Does it really make sense? What is
the compelling rationale?
- Inadequate due diligence – Somebody didn’t do their homework, deep enough to surface problems
- Lack of a compelling strategic rationale – Longer term, does the strategy
accelerate your growth?
- Unrealistic expectations of possible synergies – What looks good on paper may not work in reality
- Costs too much – Are the financials being “hyped” by hopes and dreams?
- Conflicting cultures – Size changes the culture: Styles, plans, structures, direction and egos
- Failure to move quickly enough to meld the business – Integration must move in a timely manner
WHY “RIGHTSIZE” QUICKLY? – The longer you wait the more difficlt to achieve the objective
- Turn-around – At least one segment of the business usually needs to be
- Accelerated growth or future expansion – If you’re going to grow quickly,
- Strategic redirection – Prepare to redirect your assets and resources for the future
- New markets, products, distribution, customers – No one is going to wait for you. Get there first.
- Improve staff – Now is the time to “cherry-pick” top performers. Give the rest to the competition.
THE “PEOPLE” PHILOSOPHY IS IMPORTANT – Getconsistency! All these factors arecritical.
- “My people” – Those I can trust, can work with, and will lead by example
- The best people – Those that can achieve the best performance over time
- The “drivers” – Those who can move the business in the direction I want, quickly
- The next generation – Those that can take over and accelerate my “dream”
WHAT ARE THE POTENTIAL IMPLICATIONS?
- Up to 50% of management may be replaced over time. Business needs may outstrip their abilities.
- Consolidation of locations and staff is inevitable. Make sure you have a professional to help you.
- An average 10% of jobs are lost due to the transition. Have a plan in place.
- 75% of expansions/mergers fail to achieve the expectations. Be very conservative with your goals.
- Whatever the plan, it may take three-times the expected time-line and twice the cost. Be prepared.
Whether you downsize, rightsize, upsize or contemplate a merger, bring in a pro who has done it many other times and places. You’ll end up more successful, quicker, than trying to fix the problems while moving forward. It’s like changing a flat tire while driving 60 miles and hour.
Call now for a free consultation and we’ll explain how we can help. No obligation, just objective input! Contact Bill Kaufmann, President, My Greener Future at the email: email@example.com. Our website is: mygreenerfuture.com