Entrepreneurs who grow their business through acquisition are twice as likely to experience growth above their industry average.
A study by BDC (Business Development Bank of Canada) also found that in the next five years 25 per cent of Canadian entrepreneurs want to sell or close their business.
Pierre Cléroux, Vice President, Research and Chief Economist, BDC, said growth through acquisition has several advantages, including adding new resources to address labour shortages and accessing more technology, so you can do more with less.
“It’s a great strategy to grow a business. In the research we did, we saw businesses who are making acquisitions grow faster than the average business in their own sector,” said Cléroux. “The reason why businesses are making acquisitions is to increase their profitability, to increase their market share, to expand to another region.”
“We have been doing research on this for a long time but what is new now is some businesses are making acquisitions to have access to technology and also to have access to talent. There’s a shortage of labour in Canada. It’s very difficult to recruit people. So more and more businesses are making acquisitions to have access to employees. This is a new phenomena, basically corresponding to the main issue of the day.”
The BDC study highlights four winning strategies for a successful business acquisition:
- Include the acquisition in your strategic plan
- Be dedicated to the acquisition because it will take time
- Implement the integration plan from day one
- Plan for unpleasant surprises
Cléroux said there is an aging entrepreneur population in Canada. Many entrepreneurs are getting older with about 170,000 over 65 years old.
“So they have to think about business transition. A lot of people are going to have to make a transition in the next 10 years. On the other side, our businesses are typically small in Canada so it’s a good idea, it’s a good strategy, to scale up because you need a certain size to be more profitable, you need a certain size to export, you need a certain size to be as efficient as you can be. It’s a win-win, basically on both sides,” he said. “That’s why it’s an important topic right now.”
“There was always business transition in the past but what we are seeing now is there’s much more and there’s going to be much more in the next 10 years.”
“It’s a great opportunity for many entrepreneurs who are younger and they are looking to grow their business because there’s going to be a lot of businesses for sale. Not all of them are interesting businesses to buy but a lot of them are. It’s a unique situation. It’s related to the fact that just like the general population entrepreneurs are getting older. There’s a lot of entrepreneurs over 65 so there’s a need for them to make this business transition. This is a great time for entrepreneurs who are a little bit younger, they want to scale up their business. There’s a lot of great opportunities out there.”
Grow, Transition or Sell Your Business at The Business Transitions Forum!
Join BDC, the presenting sponsor of the 7th annual Business Transitions Forum Toronto conference at the MTCC on May 9, 2023!
The Business Transitions Forum (BTF) is a conference for business owners about growth and transition. Optimizing the value of your business, learning how to scale-up, understanding the range of choices for how, or who to transition to and then preparing for it, are just some of the fundamental elements that should be a part of your business planning today.
With over 35 speakers and 12 tactical sessions, The Business Transitions Forum gives entrepreneurs actionable growth and transition strategies to help take their business to the next level, while networking with Canada’s top business owners, M&A advisors & senior executives.
BTF helps business owners like you solve important questions:
- Can your business run without you?
- Should you continue growing your business, or is it time to sell?
- What are the growth and scaling strategies that provide the greatest ROI?
- What is the true value of your business?
- What do you need to know before buying/selling a business?
And so much more…
We’re also offering an exclusive discount to the CanadianSME community. Use promo code “SME20” at checkout to receive 20% off your tickets!
Interested in learning more? Check out our 2023 program!