Growing Your Company With Business Mergers
Growth is the goal of most every business, and 99 percent of those business owners will tell you that it’s not easy. Aside from the obvious need to have enough paying customers warrant expansion, it takes a substantial amount of money to fund the actual growing. Upping inventory, moving and increased marketing all bring about sizable bills, and this is why you’ll often see business mergers between two companies looking to expand. With the right partnering, you can double the size of your business without doubling the size of your business expenses.
Merging with another company can be tricky, since two separate businesses are stepping into one another’s space. As long as there is mutual respect, coexisting can instantly supplement growth. Depending on the logistics, it’s possible to operate two businesses out of the same location, effectively cutting you rent and utility bills in half. With many business mergers, the two companies can continue doing their separate work and only combine forces where necessary. Some mergers involve shared personnel; others might share nothing more than a copy machine.
If the companies combining forces are generally on par with one another, the growth can be done in unison and the relationship will stay symbiotic for an extended period. The other business owner can help answer some of the questions you have about tackling growth, and you can do the same for them. It’s important to be cautious heading into a merger, but the right situation can be very beneficial.
Funding the Coupling
In some cases, business mergers are simple and cost free. In other cases, a new location is needed and other unexpected expenses will pop up. One way to handle these joint expenses is by securing a loan using assets from both companies as collateral. Leaving one business owner on the hook for all costs is a recipe for the type of betrayal that Hollywood loves; as long as this is a merger and not an acquisition, each company should be covering their fair share. Similarly, if one business is moving into a space already owned by the other, it’s worth figuring out who stands to save more money out of the gate and factor that in when supplies or maintenance need to be covered.
Business mergers won’t work for everyone, but companies that can pair with a growing counterpart are able to expand without first supplying a tremendous amount of growth capital. Before heading to the bank to take out an oversized loan with interest rates that might actually stifle your growth, consider a merger that can benefit everyone involved.