Are you Paying Attention to Businesses for Sale?
You should be.
This article is not about buying a business so you have ANOTHER business, or buying a business as an investment because it already runs under management, etc. Some of you are in the financial and knowledge position to make such a purchase and that is very exciting no doubt. Here, we want to explore the buying of a business as potentially the quickest way to massively increase customer count. You know, a business that is relatively small and, in fact – ISN’T really a business at all. Consider these potential purchases as simply buying ‘customers’.
For example say you are in the ABC business, and you notice another ABC ‘business’ for sale online. They want $25,000 for it, and you find out through your negotiations and due diligence that they have 132 active customer accounts, and a database of 854 inactive accounts. Is that a good deal? Well, let’s say that we are a smart business owners and we know with great confidence what our current average acquisition cost per customer is = $485. And let’s also say that we were expecting 50% of the 132 active customers to potentially fall off, leaving us with only 66 new customers instead of 132. This would mean we instantly brought on 66 new customers for $379 a piece. What a bargain!
If you want to grow, and grow fast, and you can cash-flow it – keep your eye on acquiring small businesses as potentially your best lead/customer increase strategy.
Now, no doubt the seller will try and push the value of the brand, the vehicles, the equipment, etc, but in this strategy you need to stay focused on the end goal – “I want access to those customers and that database”. Before you say, “ya but this is an expensive way to grow’, consider what you would spend in marketing and advertising to just have a ‘chance‘ at acquiring the same amount of customers and leads that such a business purchase would yield. You’d likely end up spending more, AND take a couple years to grow to the same customer count you could in a single purchase transaction. Obviously these deals work best with a warm introduction from the seller, professing trust and confidence in the buyer, etc.
Why don’t we hear about more businesses trying this strategy, or at LEAST exploring potential businesses (customers) to buy on a weekly basis? Usually just lack of knowledge and confidence. In other words: it’s not something that one gets excited about if one does not even know his/her current acquisition cost, etc.
To learn more about how to calculate your average customer acquisition cost, and figure out a reasonable ‘allowable’ customer acquisition cost for your business – book a meeting with one of our coaches HERE.