When entrepreneurs or business owners are looking to expand, they often face an important decision. Should they start from square one with a new business, or buy an already established one? The preferable option is to buy, since it offers several advantages compared to starting a brand new business. Disney is a great example of how buying a business can be a better way to grow. They’ve made numerous acquisitions over the years, including Pixar, Marvel, and Lucasfilm. Let’s explore some of those key reasons why buying a business is the best way to expand.
One of the most significant advantages you’ll find when you buy a business is its established customer base. This pre-existing pool of consumers is going to eliminate the need for you to build customer relationships from scratch. As the new owner, you can take over these existing relationships and start generating revenue immediately. That’s both time and money saved that you would have spent acquiring a new customer base. Furthermore, you now have a steady stream of revenue, which will allow you to focus on other aspects of your business.
For instance, when Disney acquired Pixar in 2006, they gained access to Pixar's well-established brand and loyal customer base. Pixar had already proven itself as a leader in the animation industry, and Disney was able to leverage that success to grow their own animation division. They also gained access to Pixar's talented team of animators and storytellers, which helped Disney produce a string of successful animated films such as "Toy Story 3," "Inside Out," and "Coco."
Another advantage of purchasing a business is having a proven business model. An established company has already gone through the process of developing a business model that works. You won’t have to experiment with different models to determine what works best. Instead, you can stick to the current model and expand on it to grow even further. This is another aspect that will not only save time and resources but also open an opportunity for further growth.
Similarly, Disney's acquisition of Marvel in 2009 gave them access to a well-established and highly profitable brand with a massive fan base. Marvel had already developed a successful business model for producing superhero movies, and Disney was able to leverage that success to expand the Marvel Cinematic Universe and produce blockbuster films such as "The Avengers" and "Black Panther."
Acquiring a business will give you access to established relationships with partners and suppliers, which can help your company grow more efficiently. Established partnerships and suppliers will provide you with the resources and support you need to run your business effectively. Raw materials, distribution networks, and marketing channels are all examples of this. With access to these resources, you can concentrate on expanding your business rather than your network.
Disney's acquisition of Lucasfilm in 2012 gave them access to the "Star Wars" franchise and all its established characters and storylines. Disney used this acquisition to expand the "Star Wars" universe, create new revenue streams, and reach new markets.
An established customer base, a proven business model, and access to established suppliers and partners are just a few of the advantages of buying a business. However, business owners and entrepreneurs must carefully weigh all their options before making a choice. Equiturn specializes in M&A and provides growth management consulting services to help scale your business. Our team of experts will support you with market research, customer segmentation, sales optimization, business transformation, and more. Unlock your success and reach out to one of our M&A specialists from our team. We will be happy to connect and discuss the strategy to advance your company goals.