Are you a megalomaniac small business owner?

I had many emails regarding my post “Is your competitor for sale?”, the responses show me that some of you certainly have a healthy megalomaniac instinct - good for you!

Here comes the BUT! You need to be careful, for bigger business does not always mean better business. While there is no limit to the size of a bootstrapping business - see Shawn Hessinger on “How big can a bootstrapper be?” - it never the less can be a risky strategy to grow through acquisitions. I put some basic pointer for your consideration below:

1. Businesses come with people and all the associated problems - so make sure the culture fits;
2. Target group should be identical to yours, i.e. serve the same customer base, so you get more turnover for both businesses;
3. Synergies - find them and make them work for you - by sharing resources you can lower the cost-structure in both businesses;
4. Distance - make sure you can easily be in both businesses, so keep it close;
5. Level of debt in the new business - make sure you can handle it easily, don’t risk your current business.

There are other points to consider, so good and trusted advice is absolutely essential. I guess here you will have to decide if you are a gambler (bad) or just a risk-taker (good). Since you made to this point I shall hope you are an entrepreneurial risk-taker.

So, if you are anything like me, you’ll be thinking “Screw it - let’s do it!” ST.

3 Responses to “Are you a megalomaniac small business owner?”

1. Emily Coltman
   http://www.askm.co.uk/blog.asp
   
   Said on January 9th, 2008 at 12:45 pm

   Stefan, you’ve been reading Richard Branson!!

   I’m curious about point number 4 given that you’ve said before, you and all your team work from home. What would you call “close”?

   Same street, same city, same country?

   M

   P.S. Happy New Year!

2. Stefan Töpfer
   http://www.winweb.com
   
   Said on January 9th, 2008 at 1:06 pm

   Happy New Year to you too, Emily.

   That is right he has a little book by the title” Screw it, lets do it!” I read it an liked it very much.

   I think local is relative to the business you are in and to the size of your business, but I would think same city/town or a radius of 30-60 min travel-time would be appropriate for a start.

   Stefan

3. Emily Coltman
   http://www.askm.co.uk/blog.asp
   
   Said on January 10th, 2008 at 9:41 am

   I’ve read that too and enjoyed it - it’s part of my small business library. I liked the bit about he set up as a Christmas tree grower and ended up selling rabbits to the local butcher!

   I guess if you’re merging with a business, you need to know as much as you can about it, and that kind of knowledge is best attained by not only working with them but watching how they work. And that’s best done nearer home.

   M

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