A key consideration for all business owners should be their exit strategy.
One of the exit strategies not often considered is to sell to a competitor that can take advantage of your income without inheriting all of your expenses.
Up until recent years most business owners would never have contemplated selling their business to a competitor.
Generally it was due to the competitive rivalry they have developed or the obvious one “I don’t want them to see my figures”.
Well, things certainly have changed and now we often see competitors as being the obvious choice.
It makes good sense – they take out a competitor, expand their customer base, increase buying power and the product range, and they get the massive bonus of industry-trained staff.
Perhaps the biggest attraction though is the additional revenue that is gained without increasing fixed expenses such as rent and electricity, administration costs, logistics, sales staff, advertising and insurance.
Of course this approach needs to be done carefully as there’s always a risk that the buyer may not proceed to settlement, therefore exposing your clientele, staff details, suppliers, lease details and any weaknesses in your business.
Rod Russell, Principal, Savvy Business, Suite 9, 68 Jessica Boulevard, Minyama, 5444 3300, savvybusiness.com.au
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