I recently worked with an accidental CEO early in her career. She took over the business after the sudden death of the previous owner. She stepped in as interim president, not knowing that she would eventually lead to a turnaround or shutdown situation. Or, it will be her new career.
Not only did she succeed in turning the business around, she now heads a large and very successful business in less than 10 years and is now looking to buy a company to expand.
Why Small Business CEOs Should Consider M&A Now
As a small business CEO, if you’re not thinking about M&A as part of your strategic growth in your 3 to 5-year plan, you’re likely overlooking the biggest opportunities for growth. If you wait until the economy stabilizes, you will miss an opportunity. As you consider purchases, there are Five things You should think:
1. Is your house in order? Do a self-audit or at least look in the mirror before starting a transaction. Do you have the right players, in the right seats, is everything running smoothly? Understand where you expand during the transaction and where you pull from to meet requirements.
2. Understand your risk tolerance. Determine the risk you can tolerate if things don’t go according to plan with your organic business or a slowing economy. Do you have your reserves and contingency plans? Care should be taken thoroughly; Small and mid-sized acquisitions by small and mid-sized companies often require more detailed attention because of the catastrophic impact a failed deal can have on the business. Involve your team members in care as much as is practicable; In addition to investing in transactional success and post-integration, they become better leaders as a result.
3. What is the growth opportunity? Specifically, what is the strategic growth opportunity? M&A can drive growth, especially as organic growth may lag during slower economic times.
4. What does culture look like? Although people and culture are an important part of how a small business is successful, culture is often overlooked, especially in small businesses. Cultural attention is just as important as financial and operational attention. Culture clash can kill a deal or cause post-deal integration failure.
5. Are you brave enough? Through exponential growth, a small business can disrupt an industry and become an industry leader. Get one business a year and you can be a leader in that industry. In short, don’t miss an opportunity by waiting for a stable economy; A good deal is a good deal in tough times.
Finally, if you’re struggling to figure these things out on your own, get some help. Smart small business owners know they need to work with mentors and coaches to help them navigate their business expansion. You are entering unknown territory. It makes sense to have someone to help you navigate the process and take advantage of M&A opportunities in your industry and business model.
As a Vistage Chair, I work with high-performing CEOs like you who are committed to what I call “A Life of Climb”—constantly working together to be the best leaders who enjoy better results for their companies. If this article resonates with you, I invite you to connect with me by email at Nora.Taylor@vistagechair.comor on LinkedIn.
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