Peter
Oftentimes the rationale behind an acquisitions-based growth strategy is the need to win more customers.
Buying up other businesses in order to grow usually falls under the strategic acquisitions category. These types of acquisitions have the goal of expanding the market for a product or service. In order to carry out this strategy a company will acquire businesses with similar products or customers to facilitate introduction of its own products into the new market.
Having excess capacity in an industry can trigger acquisitions.
Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett
Let’s look at how smart business owners use acquisitions to eliminate excess capacity within their industries. For the sake of example, let’s consider as a scenario a small town with three bakeries. To keep things simple and easy to follow, I will use nice round numbers. Let’s pretend that each of the three bakeries sells $1 million worth of baked goods per year.
Oftentimes the only difference between winning and losing is your attitude. The tennis great Vitas Gerulaitis embodied the champion attitude.
In this new series I will take a look at situations where it makes sense for an entrepreneur or small business owner to grow via acquisitions.
Opportunistic acquisitions are those that appear unexpectedly or simply when you’re not looking for them. To illustrate, I will share a story about bicycle shop owner I knew long ago. Having been a road racer in a past life, I have always been fond of bicycle shops and at one point dreamt of having one of my own.
Billionaire Jimmy Pattison is not only one of the richest men in Canada but in the world as well and has been for a very long time. He’s 85 as of this writing and still as spry as ever. Being from my hometown, Jimmy was one of the first tycoons to appear on my tycoon radar. He serves as an inspirational figure for anyone wanting to go down the tycoon path.
In addition to being famous for having built a huge and very profitable conglomerate over the decades, he’s well known for a few other things. For one thing, he pronounces “business” as “bidness.” No one knows why but people just accept it. (There’s another tycoon who pronounces the word as “bidness,” but I can’t recall who it is at the moment.)
Recent Comments