Grow or be eaten?

Author: Nick Ursem

Growth. It is the holy grail of entrepreneurship. When I ask any entrepreneur about his ambitions, nine times out of ten the answer revolves around growth: more sales, more customers, more profits. But how do you realize this growth? That is the big question. Especially at a time when consolidation seems to be becoming the norm in many sectors.

The transportation sector, installation sector, business services. Just a few sectors in which consolidation is a hot topic and in which we from Sophista have recently been involved as consultants. Whereas in the past these sectors mostly consisted of medium-sized and smaller companies, today we see increasingly larger players dominating the market. Private equity and strategic buyers are merging companies, seeking synergy benefits and increasing their market share. For you as an entrepreneur, this means that you are faced with a fundamental choice: grow with the company through mergers and acquisitions or stick to organic growth?

Both strategies have benefits and risks. Growing autonomously means keeping a grip on the company culture and strategy, but requires time, investment and patience. Merging or selling to a larger party can bring speed and economies of scale, but also means letting go for you as a business owner and integrating into a bigger picture.

Practice shows that standing still is not an option. Entrepreneurs who sit back and wait now will wonder in a few years why they are being overtaken by the competition. Those who do not grow along in a consolidating market risk being marginalized.

But what then is the best choice? That depends on your ambition, market position and – perhaps most importantly – your own entrepreneurial heart. Do you want to build a larger entity and benefit from economies of scale? Then perhaps a merger or acquisition is the way to go. Do you want to stay in control and grow more slowly but steadily? Then the key is to strengthen distinctiveness and seek strategic alliances.

Growth ultimately comes from your choices as an entrepreneur. And in today’s economic climate, those choices are more important than ever.

This column appeared in the spring issue of INTO business Westfriesland.