Money
Issue No. 33 - February/March 2007
Why SMEs are gearing up for growth
by Dr Elizabeth Short
Business acquisition is becoming the new holy grail for many small to medium enterprises.
Increasing compliance levels, one of the tightest job markets in decades and tough competition means savvy operators are increasingly viewing business acquisition as the answer to their challenges.
And, in the experience of Macquarie Relationship Banking, the move can be justified. A well-executed business acquisition can successfully resolve many problems.
A key issue currently facing many SMEs is slowing profit growth. Consequently, many business owners are taking advantage of low interest rates and strong balance sheets to fast-track growth by acquisition.
This approach can:
•Expand their client base, boosting market share and revenue
•Accelerate growth than organic growth alone
•Generate economies of scale
•Provide access to new products and services.
It can also help win the war for talent.
Many professions in South Australia, particularly in professional services sectors such as accounting and financial planning, are experiencing chronic staff shortages. Employers know they must reassess their recruitment strategies and do more.
'Doing more' can include offering financial rewards such as higher salaries, or providing non-financial incentives like more flexible working conditions.
Another effective strategy can be to 'buy' experienced, talented employees through the process of an acquisition.
This approach can also generate staff retention benefits.
Aside from acquiring new talent, a larger business can provide existing employees with better career options. Staff who can see a career path for themselves are more likely to stay rather than leave and join a larger rival or establish their own firm.
Anecdotally, we hear that compliance is placing an increasing burden on many SMEs in the form of more paperwork and reporting, which can require additional staff and...
