Have you recently heard about a competitor who’s ready to sell their business? Want to know if purchasing a competing business is a smart business strategy? As the MidSouth’s largest independent brokerage firm, our team at Alliant understand the unique value of this particular situation. Though small business ownership comes with some risk, buying an existing business reduces that risk while creating opportunities for tremendous profit.
Here are three great reasons why buying a competitor’s business may be worth considering.
Advantage 1: Eliminate Competition
The most obvious benefit of buying another business is eliminating competition. If a business is competing with you for customers, there will be less business for your company. Purchasing the competition allows you to control more of the market. As an extra benefit, buying out a competitor can allow you to put more funds into marketing and product development. Ultimately, increasing your business footprint is the primary objective of any business owner and purchasing an existing competitor is one of the fastest ways to do so.
Advantage 2: Added Services or Products
Your competitor may have an incredible product, service or location that your company doesn’t have. This could be a chance to expand. By buying out a company, you’re gaining the rights to their product designs. If your business is well-known among customers, offering a new service or product could bring lots of new revenue streams.
On the flip side, it is important not to jump to any conclusions that the business is being sold due to lack of success. There are numerous reasons why existing business owners choose to sell their business. Due diligence in such opportunities is an important first step.
Advantage 3: Improved Workflows
There’s always something that you can learn from another company. It could be that purchasing a competitor will allow you to find a more efficient method for production, reduce costs, or reach a wider base of clients.
Additionally, employees, and their industry knowledge, often get overlooked in a buyout. You may find excellent, dedicated employees from the company you purchase. Determine key employees and how you can keep them during the transition; doing so eases fears of other staff as well as customers who might otherwise get nervous during this period.
How To Buy-Out A Competitor’s Business
The first step is finding help for the process. An experienced business broker will discuss your personal and financial goals. They will help you through the buy-out process: securing or reviewing a business valuation, negotiating an offer and ensuring a seamless closing. At Alliant, our objective is to guide you from the very first step through the closing transaction, answering any questions you have along the way.
If you are considering buying out a competitor’s business, contact us today to see how we can help you capitalize on that tremendous opportunity.