When it comes to sales revenue growth, there are two strategies that are often overlooked by many: acquisition and self-creation. In this episode, Doug C. Brown flies solo to shed light on these great yet underutilized strategies. He then compares acquisition to self-creation, outlining each of their pros and cons and who can best benefit from either one of them. What is more, Doug then lays down a couple of questions you need to think first before diving in deep to acquiring something. Get ahead of the game by leveraging this obscured tool in this discussion!
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Sales Revenue Growth Strategies: Understanding Acquisition Versus Self-Creation
I’m doing this solo. The reason is because it’s an important topic to me that a lot of people overlooked in growing a revenue stream. When you’re going at revenue growth strategy, there are different ways of doing this. One of the most obscured and overlooked ones that people think about but they don’t think about it as a revenue growth strategy is acquisition. What is meant by acquisition and self-creation? What’s the definition of both of these? Think about the acquisition in terms of there’s already something existing there. It’s not something that you have to create. It’s an asset that’s sitting there. You are going to buy or somehow acquire it, whether it’s through purchase or bartering. You are going to be able to get access to something that’s already existing.
Self-creation, on the other hand, is you must create it from scratch. There’s nothing there. You are going to take your ideas, take something, going to do the research, form those ideas and create it or you might have to build it. The acquisition is already there. It’s just waiting for you to come and get it. Self-creation is you are going to have to do everything right from the beginning and spend the time, energy and money to create that program, product, service, building, automobile or whatever it might be.A lot of times, people are trying to make new creations because they like to be creators. Click To Tweet
What I want to talk with you about is, “Should we be doing acquisition or a new creation?” A lot of times, people are trying to do new creations because they like to be creators. Let’s talk about acquisition versus self-creation and the benefits. If you think about acquisition, it is cool because you can look and take something that might be distressed, underserved or underperforming. When you have something that’s underperforming, you can take that and immediately start building upon that to make it better.
I had a construction company I was speaking with. They bought a distressed company that had a different product line. They wanted to go into a new product line. They bought this distressed company. It was doing $3 million a year. In two years, they built it from $3 million to $50 million. There are reasons why this can happen. One of my clients was a training client. I was able to take their same product and improve upon it with a couple of changes. They went from selling $8 to $108 a month. Then the following month $210, then $300. They stayed consistent through that process. It was the same product. The acquisition is not a bad thing if you understand why you’re doing it.
If you have self-creation, it also has some advantages. There’s no bad will. If somebody doesn’t understand what it is, if you acquired a distressed asset or something, there’s already experience that people are having. Whether that’s positive or negative, it will reflect on whether or not you want to go for the acquisition side. The downside of new product creation or could be the upside, is there is no track record. There’s no bad will, so that’s not a bad thing. You might have to educate your audience to partake in the new product or service offering. As you educate them, that takes time, money and energy to do so. Brand or market awareness is something else that is great for acquisition because you already have brand or market awareness in and you won’t have that necessarily with self-creation. You’re going to have to create it and educate your audience.
Regardless of whether or not you want to do an acquisition or self-creation, ask yourself some questions. If you’re going to self-create something, are you doing this for artistic reasons? If that’s part of your business plan, great. Go for it. If you’re just doing it to be creative and artistic, like a lot of entrepreneurs are, it may not be the best route for you to go. In other words, you might be creating something and it takes you a lot longer than you figure it. It costs you a lot more money than you figure it. It might be harder to bring to market than you figure. With an acquisition, you do have that track record. You’re not necessarily being creative out of the gate, but you will be creative to improve upon the acquired asset at that point to make it better. You might want to think through that thing.You don’t want to put yourself into suffering and have a lack of success because you’re not preparing. Click To Tweet
There are a few things that I want you to ask yourself a question, whether you’re going to acquire something or you’re going to self-create it. Number one, how does it impact your processes or systems? When you’re acquiring something, for example, you might be acquiring a whole new group of people. When you’re acquiring an asset, for example, if you bought a company, they might already have established people. How are they going to fit into your organization? How is it going to impede or improve your process? You want to ask those questions. If you’re going to self-create something, how does this impact your current process? Is it going to slow down production and things that are already working? Hopefully, it’s creative to be complimentary. How is it going to impact you in the business, in the process and in the systems of the business?
Number two, how does it affect your partnerships? If you have partnerships, I don’t necessarily mean business partnerships. I mean people working that you’re outsourcing to, that might be intrapreneurs within the company. How is it affecting them? If you go and acquire this asset, what is the upside? What is the downside? You want to weigh these factors, whether you acquire it or you self-create it. For example, on the self-creation side, if it takes a little longer than you want it to take, you built an agency force or an independent sales force, and they’re waiting for the delivery, they’re probably going to move on. You want to look at how does it impact the people that you’re working with as partners.
Lastly, how is it going to impact the people in general, the people that work, who are doing the marketing and who have to put the product creation together? Is it a good use of their time to be a self-creator in that capacity? Is it better to find something and acquire that? Sometimes, when people think acquisition, “I’ve got to spend a lot of money,” not necessarily. You can go in and take products or services that are already created and create a white labeling situation. What does that mean? White labeling means, “This has already been created. It’s a great product. All you have to do is put your logo or name on it.”
If it’s a digital asset, for example, you might have to shoot a frontend or backend and use the product, the program and white-label it. Quite frankly, you support it with all the customer service and no one knows the wiser. Do you think that all these cosmetics that are out there are all manufactured and created in-house by the manufacturing company? In many cases, they are not. They are formulated. They give the formula to a manufacturing processing plant and the processing plant turns these things out. The reason they do that is because it’s expensive to open a manufacturing facility. You might just want to be the sales arm and white label the program. If you’re self-creating, you got to start all the way from the beginning. One’s not better than the other but it’s a growth strategy to acquisition and to product creation because you’re expanding, hopefully, the reach that you’re going to get.
The other thing you want to look at is why are you doing this? Are you doing it for cashflow or positioning? That will help you determine whether or not you’re self-created. For example, if you’re self-creating something that involves other people, other companies and other entities where you could bring them in, showcase them and they can showcase you and all of these things going on, you’re building potential business relationships? That might be worth self-creating. However, if you don’t have that and you need to get something out quickly to the market, acquisition, if it’s short, if you’re buying a huge asset or huge distressed asset, then it may take a little longer. You want to look at the timing of all this as well as what you’re going through. Are you doing this for cashflow or positioning? How are you going to communicate no matter what you’re going to do? Whether you’re going to self-create or going to acquire, how do you communicate that? What’s your internal and external communication going to look like?
You want to look at this because there are a lot of unknowns when you’re doing either/or. We will all think that we’ve got the greatest ideas in the world. Many of them are great but not all of them will work. You don’t want to put yourself into suffering and to have a lack of success because you’re not preparing these types of questions. We talked about white labeling and manufacturing facilities. An acquisition can help you grow very quickly. That’s another advantage. Think of acquisition as you might be buying something, and it’s more speed to market unless you could put something out very quickly with a self-creation. I know people who put a book out over a weekend. It was a good book. If you can crank things out very quickly, if you’ve got to build a new facility that’s going to take you eight months but you can acquire a distressed property that’s going to take you three months to renovate, you might be better off with the distressed property. You might be better off with the acquisition. Whether it’s people, processes or whatever you’re going to want to acquire or whether you want to build those out, think about should you be self-creating or should you be using things like acquisition?
If you think about an employee, when you hire an employee from somebody else, you’re doing an acquisition. You’re acquiring that person who already has experience and relationships, and they’re bringing with them to you. If you got to go out, self-create it, you’ve got to put the processes in place and create the training to acquire the new potential employee or partnership in your company. It might be a longer path. Don’t discount down the idea of acquisition or self-creation. It is a revenue growth strategy. It’s often one that people think about but overlooked. They don’t investigate and push forward in figuring it out because there are so many other things to do in life. However, if you take a little bit of time, spend 30 minutes a week and you think through, “How can I acquire? How can I self-create? What should I be doing?” Ask the questions that we talked about. What I think you’ll find is over a period of time, you’re going to come up with a good opportunity or idea that will help your revenue to grow.
I’m bringing you revenue, growth, insights, CEO sales strategies, entrepreneurial strategies that are going to continue to keep challenging your mind maybe a bit or a lot of it. They’re going to give you ideas. If you love this episode, please go up and give it a five-star review. If you have comments or you’d like to send something to us directly like, “I would like to have this particular subject matter discussed,” let us know. You’re our audience. We want to support you. Until next time, to your success.