The prospect of a company merger can seem daunting to some entrepreneurs. However, joining your small business with another operation, particularly a bigger one, might not only help your business survive but even thrive.
By becoming part of a larger company, your business can derive key resources that could help your operation continue for years to come.
Expand reach into new markets
Marketing to new customers takes extensive time and money. Merging with a business in a new industry or location provides quick access to an established customer base. If you combine with a company with an established brand name, your enterprise can also benefit from the brand.
Your new parent company might have equipment to allow you to expand your product line into new areas. According to Forbes, small businesses spend 17% to 25% of their budget on inventory costs. A merger allows you to offer a more comprehensive inventory that can boost your profit margin and save money on developing new products in the process.
Save on expenses
Small businesses on modest budgets can suffer the burdens of administrative and overhead costs, along with limited purchasing power to acquire more resources. As part of a larger enterprise, you can combine your operations with the parent company to reduce overhead expenses.
Get access to new talent
By joining with a larger business, you also infuse your own organization with their talent. Your company could benefit from their experience and skills. You can also gain access to technologies and capabilities that you need to further develop your enterprise.
Business mergers and acquisitions take many forms, so some due diligence is in order if you wish to combine your operation with another company. You should know if your business will truly benefit before proceeding with a merger.