The possibilities may be endless, but your resources are not. For many business owners with limited time and money, deciding which ideas to pursue can be a challenge. Here are three ways to prioritize your options for growth:

1. Start with your company vision

The best way to make sure you’re moving in the right direction is to take a step back from all of your ideas and begin by looking at your vision for your company. Who do you want to be as a company? When you have a clear picture of your goal in mind, it will be easier to visualize what steps you need to take in order to achieve it. Without a clear vision you could end up pursuing options that actually drag you in an opposite direction.

2. Use tools to stay objective

While it’s natural to be somewhat subjective, after all business growth is exciting, you don’t want to make decisions based on emotions alone. Try bringing objectivity into your decision-making process by using tools to evaluate and compare your options. When it comes to external, growth, we typically use the Market Criteria Matrix to evaluate the best markets for growth and the Prospect Criteria Matrix to evaluate acquisition prospects. This tool can be adapted to evaluate any opportunity for growth.

Keeping your vision in mind, develop about six key criteria of your ideal opportunity. Next, you develop metrics to quantify the criteria. For example, if one of your goals is to expand your operations to the West Coast, one of your criterion would be location and the metric could be located on the West Coast. Give each option a rating using a 1-10 scale and see how well the options compare to each other and to the criteria you’ve established.

3. Gather data

Making a decision without the proper information can be a big mistake. Conduct research to validate (or invalidate) your assumptions. You don’t have to uncover every granular detail, but it will be helpful to have an understanding of trends and how they will impact your market in the future. One of the best sources of information about the marketplace is your customers. Try identifying the needs and wants of current and future customers. It may even be as simple as conducting a customer survey or asking your sales department for input.

While it can be overwhelming to process through all your options for growth, the good news is that you have many options! Hopefully these three suggestions will help you organize your thoughts as you plan your next steps.

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In today’s internet age it seems like information is widely and almost instantaneously available. Just open up a web browser and type your search into Google and thousands of hits show up in less than a second. But how much of that information is accurate?

Precise data is critical to every business decision, especially when determining your strategic plans for growth. When pursuing M&A, understanding the market landscape and future demand of your customers is essential for the success of the deal and the growth of your company. If you develop your acquisition strategy based on unverified or inaccurate data, you risk making an expensive mistake.

While the internet can be a good place to start your research, you really need to dig deeper to get the complete picture. One of the best ways to get an accurate picture of the marketplace is by conducting primary research, where you talk directly key players in the marketplace. We use a technique called the “Triangulation Approach.” You will be speaking with three main groups:

  1. Customers of the product or service can help you identify unmet needs. Ideally you should speak with a mix of large and small customers.
  2. Competitors will help you identify what it’s like to exist in the market what affects their business on a regular basis, and give you an about the competitive landscape. It may be a bit tricky contacting competitors, and you may want to consider using an outsider third party for this research.
  3. Suppliers are those who sell into the market and whose customers may be your future competition. For example a part maker or tire maker in the auto industry.

Lastly, to tie all your research together you will want to speak with trade associations, industry publications, government or even academia. They will generally be more objective and have a broader view of the market and can even help with market segmentation. We have found in particular magazines of trade associations can be extremely helpful. Those writers generally have a good pulse on the industry while maintaining a big picture view.

The Triangulation Approach

The Triangulation Approach

The main benefit of using the Triangulation Approach is that you obtain information from multiple sources in order to confirm or deny information found in secondary research. When speaking to customers or competitors it is impossible to get 100% information, but through multiple conversations you will be able to compare and contrast information. Using the triangulation approach, you can put together a holistic, accurate view of the marketplace.

Armed with this information you will have a clear picture of future demand and be able to make the right decisions for growing your business through M&A.

 

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When you’re pursuing an acquisition, making meaningful connections with the right people at the right companies can be challenging.

Who is the right person to contact? How can you go about contacting them? And once you do get in contact, what do you talk about to capture their interest?

These questions are I frequently hear from company executives.

One client of ours received no response after contacting both the owner and the CEO of an acquisition target about a potential partnership. He put it this way: “We have our people talking to the same ten key contacts, but there’s little to show for all our efforts.”

While he knew the right person to speak with, he was still unable to open the door to begin a meaningful dialogue. It’s not enough to know the players; you have to understand how to approach them and how to keep them interested. Here are three common questions we hear and three answers to help you with your contact strategy.

1) Who is the right person to contact?

Typically in a privately held, not-for-sale acquisition you’ll want to contact the owner or owners of the company. You might also contact the company CEO, president or another executive. Usually this information is listed on the company’s website or some secondary source of information. But first, do some primary research with lower-level employees in sales or operations without disclosing your interest in acquisition. They can provide you with additional insights into the company so that you’re fully educated and prepared when speaking with the owner.

2) Why haven’t they called me back?

Was it something you said? Maybe. Or maybe they never received your letter or email. Unfortunately you may never know why they didn’t respond. This is why I recommend calling instead of sending a letter. It’s a lot easier to get feedback from a live dialogue and to gain deeper insights. You’ll at least know they heard your message through all the clutter.  This is also a great reason for having multiple target companies… there’s bound to be a percentage of owners who never respond to your invitations.

 3) How do you keep the target interested?

Your goal during a first call is to draw the owner of an acquisition target into a conversation. Don’t try to get them to sell their company over the phone – no one is going to do that! Instead keep them on the phone by demonstrating your knowledge of their company and business and your strategic vision for a partnership (whether that be 100 percent acquisition, joint venture, strategic alliance, or minority investment).

Our clients find that they may have trouble opening doors with the correct people, even if they are familiar with many of the players in their space. These tips should help, but speaking with owners does require a certain amount of expertise and practice. Even after 20 years of experience, we still hear the word “no” on occasion. Each contact you make with an owner is a link in the chain that could lead to a prosperous acquisition. Don’t ruin your chances for a successful acquisition by making preventable mistakes. Make sure you’re prepared.

You can learn more about contacting owners in our upcoming webinar: “The First Date”: Contacting Owners and Successful First Meetings.

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“Keep your pipeline full,” I often tell clients when speaking about their acquisition prospects. By this I mean that in pursuing M&A you should research 75 to 100 companies. That’s a lot of companies and research, which of course you must record in an appropriate manner.

How can you keep track of all your data? What member of your acquisition team is best qualified to monitor, control, and update the pipeline database?

The short answer is someone who is extremely detail-oriented and organized. Think of this person as the M&A librarian. I recommend the librarian is not the acquisition champion because this role will require a fair amount of work. The librarian will meticulously keep track of all the information gathered by the acquisition team and catalogue it appropriately.

My clients often use tools such as Microsoft Access, Salesforce, Act!, or other data management software to organize all the data. Recording your findings in an orderly, accessible fashion is critical to ensuring your data is useful and meaningful to you during the acquisition process.

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Research is essential to the success of any business plan, including acquisition. The demand-driven, “markets first” acquisition process that I advocate requires thorough research. Only thorough research uncovers the most appropriate markets, helps you identify the best prospects, and sets you apart from other potential buyers.

There are two levels of research to consider: primary and secondary research.

Primary vs Secondary Research

Secondary research is the easier kind of research, drawing from public sources such as the Internet. Secondary research enables you to explore market size, growth rates, supply chains and other market dynamics. This is an essential requisite that prepares you for conducting the more difficult but more rewarding primary research.

With primary research, you get on the phone and talk to a variety of industry players and observers about the market, industry trends, and where possible, your acquisition prospects.

Both primary and secondary research are key to your acquisition process. At the planning stage, understand the importance of research ensures that you and your team are committed throughout the rest of the process.

*This post was adapted from David Braun’s Successful Acquisitions, available at Amazon.com

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Quality research is an important part of the acquisition process. Thorough research allows you to fully understand the market and prospects for acquisition.  In the Association for Corporate Growth (ACG) blog, I explain how to effectively conduct primary and secondary research, including who to contact and how to overcome challenges you may encounter during your research. Head on over to their blog to learn more about researching as you pursue acquisition.

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Let’s say you have identified a specific company as a prospective acquisition. To get to know that company, you must do primary research, not just secondary (online or library) research. This involves getting on the phone and talking to people who deal with the company on a regular basis, and eventually to the principals themselves.

Primary prospect research often requires a deft handling of phone conversations. This is what I call ‘‘the information dance.’’ Through years of experience, I have developed some general guidelines on how best to conduct yourself when eliciting information about a specific company.

Be prepared with a plan and appropriate contacts: Before you dial, know what information you are trying to uncover and whom you can best get it from. For example, if you are discussing a technology, the engineering department is probably your best starting point.

Be informed about the prospect and the market: Through your market research and secondary prospect research, you should have obtained a baseline of information that gives you credibility when speaking to a source.

Be honest: As with market research, honesty in prospect research is always the best policy. This doesn’t mean that you need to reveal your entire strategic plan to a stranger on the phone. It means don’t lie. You can reveal as little or as much information as you feel comfortable with, but understand that your own disclosures may not be enough to persuade the other person to reveal the data you seek.

Be creative: When discussing a company, you often want to start off slow before zeroing in on specific information. You can even ask questions you already know the answers to in order to get the conversation rolling, and then move on to more significant areas. You need to gain the trust of your source before extracting the gritty details of a company.

Be persistent, but not annoying: Leaving messages is fine, and if you don’t get a call back, wait a few days and then try again. There is no need to call every day or multiple times in a day. If there is no reply after the first few messages, move on to another source.

Be realistic, and prepared for rejection: Some people are so skeptical of your motives that they simply won’t want to talk to you. Others become uncomfortable if you ask them to reveal too much information. You may hear the word ‘‘proprietary’’ over and over. Don’t let this get you down. Just move on to the next source.

*This post was adapted from David Braun’s Successful Acquisition, available at Amazon.com

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