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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Expanding internationally can provide numerous opportunities to grow your business using acquisitions, joint ventures or strategic partnerships, but before you can decide which market to enter, you’ll need to do some research.

The data sources you use for your research will vary depending on location and industry and the specific information you are seeking. We’ve listed a number of helpful resources we use in our research of international markets and companies.

Kompass – Kompass is a business to business directory and is a great resource for finding privately held, international companies.

Trade Associations – Just like U.S. ones, international trade associations can be very helpful if you know which industry you want to focus on. They typically conduct their own research or have access to in-country market research.

US Chamber of Commerce and the US Embassy Business Consulate Office – The in-country offices will have plenty of information for you. The Chamber of Commercial usually has commercial information while the Embassy will focus on the government.

Region Specific Sources – For example, we’ll use Companies House in the U.K. or JETRO in Japan.

Using these secondary sources are just the first step in your research. Once you’ve conducted your secondary research, you’ll most likely want to conduct primary research in order to gain a deeper understanding of the markets and companies.

“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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Once you’ve determined the characteristics of your ideal acquisition prospect, you’re ready to start researching specific companies.  You can begin by using secondary research to identify companies and obtain key data.  With secondary research we want to leverage the information we find to evaluate whether companies are qualified. We’ve listed a couple of resources below:

  1. Bloomberg – Information on publicly traded companies. This service is expensive, but accurate.
  2. Kompass – Information on international companies and transactions
  3. LexisNexis – Comprehensive news database, useful for researching company history
  4. Manta – Free database with information on most companies large or small
  5. OneSource – Information that’s publicly available for privately held companies
  6. S&P Capital IQ – U.S. and Global financial information and analysis
  7. Thomson Reuters – High quality research in a variety of industries
  8. Search Engines – Never underestimate the power of simple online searches. You will be surprised what you can find by simply typing keywords into Google, Yahoo! or Bing.

Remember, you will not find out everything about your prospect companies using secondary research. Your goal at this stage is to fill in a few pieces of information to determine if you want to continue researching further with primary research.

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

Feature image courtesy of albertogp123 cc

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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