As we head into 2025, what are the Strategic Growth Options for SME Business Owners.

When in business, do you sometimes find that you don't know whether to stick, twist or throw your cards in?

As an SME business owner, launching and then developing a business can be both challenging and exciting. However, most if not all businesses will get to a point, normally after a few years flat lined trading, where you hit "a glass ceiling" and a realisation that you can't take the business any further, just on your own.

So naturally, and based on a lot of the good business advice out there, you consider developing a senior leadership team from within, or recruit talent and develop them, as a succession plan. However, this strategy does takes time, effort and commitment and is not without risk, but can be a successful outcome.

But are there any other options to grow your business?

Well, Yes!

Four alternative options which tend to be missed, when you're in the thick of it, are considering a merger, an acquisition or a full business sale, or part business sale where you bring in an investor.

Each of these Four options offers unique opportunities and potential pitfalls. Below is a closer look at these strategic choices:

1. Mergers

Merging with another company can create synergies, expand market reach, and enhance competitive advantage. For example, a small IT firm might merge with a complementary software development company to combine resources and expertise, and who have a similar customer book, resulting in a stronger market position and broader (cross sell) service offerings.

2. Acquisitions

Acquiring another business can provide immediate access to new markets, technologies, and customer bases and in some case specialist resources. E.g. a retail chain might acquire a smaller competitor to increase its market share and eliminate competition. Or, as in a previous industry I worked in, acquisition of suppliers and distributors created a vertical supply chain integration, and this strategy can give you control of margins along with bringing in valuable talent and intellectual property from different elements of your own supply chain.

3. Business Sale (Full Exit)

If you're continually hitting that glass ceiling, selling your business can be a strategic move if you're looking to retire early, or more likely to pursue new ventures and capitalising on your company's value to follow those other investment interests of yours. However, with this option it's essential to prepare thoroughly, ensuring your business is attractive to potential buyers. I.e. a family-owned manufacturing business might be sold to a larger organisation seeking to expand its production capabilities. But note, it can take 18-24mths to secure a sale and even longer for a full exit, when you can walk away.  But if you can bide your time to find the right buyer, this solution could be a win-win for all parties.

4. Bringing in an Investor (Part Sale)

Often SMEs struggle to grow just relying on organic growth, i.e. reinvesting previous years surpluses. Therefore sometimes you can miss out in significant business changing opportunities as you don't have the spare financial working capital to invest and/or speculate. Therefore, attracting investors can provide the capital required for rapid growth, innovation, and expansion. This could involve equity financing, where investors receive a stake, an allocation of shares in your company. For instance, a start-up in the renewable energy sector, where there's potentially a huge growth opportunity, might bring in venture capital investors to fund research and development, accelerating its growth trajectory.

If these options appeal, some key considerations

• Due Diligence: Thoroughly research and evaluate potential partners, buyers, or investors to ensure alignment with your business goals and values.
• Valuation: Accurately assess your business's value to negotiate favourable terms and maximise returns. (Ultimately your business will only be worth, what someone else, is willing to pay, on the day)
• Legal and Financial Advice: You'll need to engage professional advisors to navigate the complexities of mergers, acquisitions, sales, or investment deals.
• Cultural Fit: Ensure that any merger or acquisition partner shares similar values and culture to facilitate a smooth integration.

If your business is stalling and you're finding it difficult to get to that next level, why not explore options like mergers, acquisitions, a business sale, or bringing in investors. These options can open new avenues for growth, success and can be a stimulus for your businesses growth.

I'm more than happy, over a cuppa, to share my last 10 years' experience in supporting business owners explore and implement the above strategies. I can pass on some real learning from recent regional examples, then you'll be able to make an informed decision, that's aligned with your long-term personal goals and business vision.

Peter Fleming

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