So you’re ready to open your second site. Brilliant! Have you considered buying out an existing agency? In my Growth, Leadership and Management Tip today I’ll advise you on the benefits of mergers and acquisitions, being friendly with your competitors, and growing a business that’s sellable.
There’s an organic way to grow a business, but you might do better to grow through through a merger or an acquisition of a competitor’s agency. It’s my opinion that you should always buy someone out, especially for your second site, because you won’t have to start from scratch with your building and equipment, with hiring all new people, and prospecting for new clients. Particularly in buying a property management business you’re also acquiring a whole book of potential sellers and investment properties to establish your brand with. Plus a property management asset is a sellable element
Negotiating a merger can be an advantage for you and the people you’re acquiring the business from. A merger with a sunset clause can help them save face upon their exit by removing any appearance of failure. This is why you maintain good relations with all of your competitors, because you never know which one you’re going to buy out one day. And you never know when you’re going to need to sell, so set a long-term goal toward building a sellable business driven on renewable income streams.
Buying a great property management business and bringing it into your own helps you get to that next scalable commercial size more quickly. You’ll have more property managers who can then split portfolios based on geography and functionality, and the way you do the work will also change. Once daily property management revenue meets cash flow requirements, sales will happen naturally. That annuity income will get you through bad markets as well as good, establishing your business as profitable and thus sellable.
I hope you’ve enjoyed this Growth, Leadership and Management Tip, and I look forward to seeing you here again next month.