Five Things to Consider When Expanding Your Company
Reid is the president of Red Door Interactive, an Internet Presence Management firm based in San Diego, California, USA, with additional offices in Denver, Colorado, USA. Reid has been an EO member since 2004. He can be reached at email@example.com.
When it comes to building a company from scratch, most entrepreneurs create a list of goals they hope to accomplish within a certain time frame. One of the biggest and frequent goals is to achieve consistent growth. There are innumerable ways to do this—including organically—but in my company, we decided to take a different approach.
Last year, our Internet Presence Management (IPM) firm, Red Door Interactive, acquired a business in a wholly different geographic market. Our goal was to expand our company and provide essential Web services to a starved market. By acquiring Breckenridge Communications—a multimedia business in Denver, Colorado, USA—we were able to do just that. Here are five critical points we considered before acquiring this new business:
Determine your value proposition.
When deciding where to expand, we researched whether our services were unique and valuable within prospective markets. For us, Denver was an attractive prospect because no other IPM firm existed in the region. What’s more, our online strategies served as a compelling and competitive advantage. Since our approach resonated in our home location of San Diego, California, USA, we felt the prospects of it appealing to Denver-based companies were significant. By doing our research and analyzing the pros and cons of locations, we found a hot spot for our business.
Learn to replicate the business model.
Attempting to take a formula and transfer it to a new city can be a daunting, but necessary, task to ensuring a successful acquisition. It’s essential for an established business model to be secured early on and a new destination selected where the business has the ability to flourish. In our case, we spent seven years fine-tuning our business model with the intent of expanding it in a new market. Breckenridge Communications saw the benefits of increased efficiencies and profitability by adopting the processes for the Denver market; integration was not only possible, but welcomed by all parties.
Find a cultural fit.
When searching for a business to acquire, we closely examined the team, even more so than the company’s client base. Finding people who could embrace and foster our company culture was necessary for the acquisition to succeed. To that end, we’ve learned it’s important to focus on the experience of team members and ensure their skills are compatible with the company’s stated mission and core values. Acquisitions tend to fail more often because of the incompatibility of both organizations’ cultures. We had to make sure that was not the case with us.
Decide whether to build or buy.
When considering an acquisition, both parties involved may wonder if it’s better to grow organically or completely merge with another firm. We learned that it’s important to weigh the options. Breckenridge Communications’ experienced team of six had been working together for years, and possessed extensive and current market knowledge. It was easier for us to keep them in place and work with them than to uproot a team well-versed in the San Diego market and ship them to Colorado.
Believe it will happen.
Growing a company in a new market can be a terrifying, yet exciting, process with many lucrative benefits. When going through the acquisition process, it’s important to believe it will work. We’ve realized that when you grow anxious over the minor details, you can lose sight of why you’re making the deal in the first place. It’s best to follow your gut and have faith.