This is How You Define Growth in a Business

Define what growth means for your business

So, as the discerning acquirer, what should you be looking out for as you browse the characteristics,  fiscal performance and operational wares of potential businesses to buy? Well, first and foremost let’s turn back to growth in business. Just as you’re looking to grow, you can identify the growth trajectory of a potential acquisition.

But what is growth, exactly, and how can you identify its traits in a business you may want to acquire? The first thing to remember, is that there is no single metric. Instead, the strategic buyer should be looking for one or more of these data points – their upward trajectory is a solid confirmation of healthy growth in a business:

• Profits
• Revenue
• New product or service launches
• Consistent expansion of a customer base
• Expanding into new markets
• Number of employees increasing

Identifying the business growth drivers that will ensure a successful acquisition

Your buy-side strategy, though, won’t just be about looking for metrics and data that show more ‘up’ arrows than ’down’. Increasing numbers in various aspects of a business, could simply be showing fleeting growth, and not sustainable growth. In fact, the overarching goal is to dig deeper into those phases, to find out whether there’s value in the growing numbers – whether the target business has been well-run from the start and is thus experiencing growth because of an expertly-crafted business model.

Businesses don’t just grow. There are clusters of factors that all have to work together, to make for an optimal environment that spurs the kind of growth that’s consistent, sustainable and healthy. And as the acquiring business, it’s these factors that you must identify, in ensuring your target purchase is a valuable one:

Efficient processes and infrastructure

Processes in a business are a vital facilitator of growth. Efficiencies and accuracy in the day-to-day operation are guided by the tactics set in stone by an effective process-driven infrastructure – and this is largely achieved by bringing systemization into the mix. What’s more, when processes are well documented and fine-tuned, they can scale with the business accordingly, and last for a number of years.

A strategy that puts growth first

The point of business isn’t to stagnate, it’s to grow. This is why business owners acquire other companies. Your target acquisition, then, must have a strategy to grow built-in from the start. The presence of this type of strategy, could be in the consistent growth of a business’s customer base, it’s innovation in bringing new products and expertise to a market, or its history of being able to expand into other markets.

The best and the brightest

Lastly, and perhaps one of the most important indicators of your target acquisition’s ability to grow, are the people that are driving it day-to-day. From a growth-focused owner to a staff that’s able and skilled enough to fuel the business to achieve its goals – people with motivation and a like-minded desire, will always be a vital asset. And it’s an asset that you’ll want to carry over and absorb, as you look to acquire and take the reins.

This is a quick guide on what to look for in a valuable acquisition. Always look for the growth history, the infrastructure in processes, and the ability and know-how of the people driving that business – simply put, a well-run industry player that will enhance your business after acquisition.

To help you in seeking the right type of acquisition, though, the first step is in realizing your vision and business legacy. And Destined is your ally there – our simple process will provide a solid foundation to help define your business acquisition strategy.

So, let’s connect.

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