Before a business can grow, it must be able to fund said growth. This becomes an issue for many young companies who aren’t able to foot that bill because they simply aren’t yet big enough. Business mergers have been practiced for ages, but more recently have become a useful way for entrepreneurs to increase the size of their company without sinking months worth of working capital into the endeavor. Instead, they join forces with a similar company and combine resources to meet increased demand. In the right situation, everyone’s bills get covered.

Growth Capital by Subtraction

One of the hardest parts of growing a company is covering the new expenses that you incur before your revenue stream expands. Some companies take out a loan in this situation, but that can just end up leaving you with an additional bill. Instead of trying to find extra money, why not cut the cost of growth? Business mergers can connect two companies with similar yet different needs, allowing them to provide for each other and cut costs across the board. If you can combine space, resources and even employees to an extent, overhead will invariably go down. You’ll be able to put resources towards actually growing that otherwise would have gone towards growth prep.

Combining Forces

Make no mistake; business mergers aren’t magical solutions that give you two companies for the price of one. You need to make sure that both parties’ needs are met before companies can join forces. Once you find a compatible merging partner, your business will be positioned to use the resources and even the clientele of the other half. A certain degree of networking is bound to accompany any business coupling. Ideally the two companies aren’t in competition with each other; if that’s the case, an acquisition makes a lot more sense than a merger.

In addition to getting your company’s name in front of a new audience, you have a secondary team to help navigate the unfamiliar waters of growing a business. Many mergers involve two companies that could benefit from a shared working situation but don’t want to give away their identity. This enables both companies to grow independently while also collaborating on the administrative process.

Letting an outside company see the inner workings of your business might not be comfortable for some, but as a means of orchestrating growth it’s a sound tactic. Business mergers allow you to cut costs while expanding your company’s outreach, something that’s only possible when forces are combined.