How to Consolidate Your Business

There are many reasons for the amalgamation, or consolidation, of businesses. Perhaps you, as a business owner, are looking to expand your client reach, eliminate competition, adopt technologies you have seen a smaller company exhibit, or to hold more power and importance in your field. Whatever the reason, and there are many more, if you are looking to expand your company you need to remember a few key things to avoid failure.

Before you even think of expanding your business it is integral to your success that you fully understand your market, your place in your market, your potential purchased companies place in their market, and their potential place in your market. Merging any two or more companies requires an in-depth knowledge of both parties’ internal functions, philosophies traits and prospects, both financially and operationally, so as to really understand how they will fit in with your own. This is even more important if you are purchasing a company in another field, where your knowledge of their workings will have to be learnt secondarily to your own. For instance, a car wash company would know very little about running the newsagents next door: it is doable with enough research and understanding, but you would not know as much as if you were to purchase another car wash company, or perhaps a bike wash company, where you both abide by, and understand, the same business trends and principles. Therefore, it requires more research and consideration.

Yes this may seem a no-brainer, but when merging companies it is very easy to take your eye off the books for not even a second whilst doing something else, and then BAM, it’s all gone wrong. Despite the money you may be saving by consolidating businesses, in HR, IT equipment and even electricity bills, the economy is ruthless and you should by no means get complacent. Getting financial consolidation software is essential in preventing mistakes and accidents that could collapse your newly grown empire. These multi-dimensional, multi-currency, multi-location, multi-purpose, automatically consolidating programmes will cover every aspect of your businesses and provide you with one coherent spread of information. Most will feature various administrative ability in order to help you understand the data, while only some feature customisable aspects and easy to control adjustments. The reason these are so intrinsic to the success of a consolidated business is that they allow multiple entries (say, from each business) and can provide an integrated overview regardless of geography or currency, rather than asking someone to amalgamate hundreds or thousands of different financial statistics manually.

By this point you will hopefully have thought about the branding of your new mother company, in fact, it is probably one of the first things you considered right at the very beginning. This is not to say that you shouldn’t still be thinking about it. Perhaps you have decided to dominate the purchased company in its entirety and adopt it as your own. Or, are you going to combine names and ethics, under your name, theirs, or both? By taking over a whole alien brand, with different attitudes, technologies, employees and results you run the risk of alienating their very cause of success. Say you adopt this newsagent next door and think, because you are a car wash, you should stock more car-related magazines than children’s ones, it’s not as if they can drive is it! By doing this without careful consideration however, you could be cutting out a large number of customers who used this newsagents to pick up their child’s favourite Pokémon magazine, and their milk and maybe a few treats for dessert. Remember that yes, this newsagents is now yours, but they may have been successful with a different audience before you came along and it would be foolish to disregard that if you do not have to.

So before, during and after considering to consolidate your business, for whatever reason it may be, remember to be sensible at all times. Do as much research into and around your potential purchase as physically possible before you go ahead; this applies to their finances, and your own too, you need to keep on top of these at all times; finally, consider every aspect of your new purchase and what it can and cannot bring to your own.

Sources:
http://hbr.org/2002/12/the-consolidation-curve/ar/1
http://www.computerweekly.com/feature/Case-study-Businesses-benefit-from-consolidation
http://smallbusiness.chron.com/businesses-consolidate-5114.html
http://en.wikipedia.org/wiki/Consolidation_(business)
http://www.adaptiveplanning.co.uk/products/consolidation/consolidations

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