Although the recent acquisition of Artisan Design Group (ADG) by Lowe’s for $133 million may give an impression that big corporations are buying up smaller companies, there is actually a lot in it for small business owners such as supporting yourself and other business owners who are just starting out on their way to success. As a business coach, I’ve realized there is also a fantastic lesson that all business owners can learn especially in scaling your small business.
It’s not just about buying other companies, but about scaling your business in a way that is compatible with your goals, market and operations.
Small businesses can duplicate this deal (grow by adding more locations to the system while reducing labor costs) in a sustainable way, increase earnings per unit and make sure they have what it takes to handle that growth. As a business coach, I see this deal as the preferred method for small businesses who want to grow in a reasonable manner: They gain more control over their different business units, personnel and budget.
The Real Lesson for Small Business Owners: Scaling Smartly
The acquisition of ADG by Lowes is a reminder that scaling is more than just a question of sizing up. It’s essential that the company also puts together its business strategy (for how) and then adjusts its operations accordingly to ensure cost-effective growth. For small businesses, this means being decidedly strategic as you expand–whether by offering additional products and services, entering new markets or improving service to current customers. Scaling intelligently is the fundamental element here.
Revenue Growth Isn’t Just About More Sales
What Lowe’s wanted to do with this acquisition was to increase its revenues by getting hold of a lot of tickets.A new customer base of proven value is open to serve them by Lowe’s. Even more can be done by Lowe’s for professional customers like builders and contractors. There is the possibility of new sales bringing in customers which are not so much startups and early adopters as “recidivists.”
Even small business owners should scale by developing long-term relationships with their best clients.Expanding a customer base isn’t the only answer; sometimes its about greater value to people who are already buying from you.Think of how you can provide new services and resolve bigger problems for your customers or perhaps form alliances with other regional businesses to reach new audiences.
Operational Management: Keeping Up With Growth
In Lowe’s, all of ADG’s products won’t just put on their shelves — they will bring ADG operations into its very own system.
That’s the number one key for small businesses, too. Growth without strong operations in place can lead to growing pains, poor customer service, and financial strain.
Business Coach Tip: Build Strong Systems Before Scaling Your Small Business
With the backdrop of You can reach a ton more people by hiring an employee or two once your systems are running smoothly.
Targeting Your Best Customers to Drive Growth
Lowe’s is leveraging its purchase to get closer to customers, like contractors and property managers, who tend to need specialized services and spend more money. For small businesses, the takeaway is clear: focus on your best customers–the ones who bring in the most money–and look for ways to serve them even better. You cannot help all–or even most–of your customers. So who remains? Who returns and spends the most?
Business Coach Insight: Focus on Your High-Value Customers
These are the people you should focus upon. Don’t waste time chasing after customers who aren’t as profitable for you instead find ways to give them more in return – whether this means offering complimentary services, improving communication through better means or providing them with exclusive offers. By doing this you will not only grow your revenue, but also build stronger, longer lasting relationships.
Operational Efficiency: Managing Growth Without the Headaches
When Lowes acquires ADG, not only does it look at the products, but also those back-end systems. They want to ensure that all of ADG’s actual operations will be able to integrate smoothly into their own IT environments without any headaches a couple months down the road. This is critical for small business.
Business Coach Tip: Focus on Streamlining Operations
With your business growing, try to streamline your operations. The more efficiently it is able to handle increased demand, the less problems that come up anyway like people hate complaining about success and nothing works for nothing. Walking through procedures on autopilot mode becomes increasingly important in this regard. Whether you are redesigning your processes with industrial robots or making a better use of technology, there is always room for improvement. Finding ways to operate more efficiently smoothens the road for later growth and sets a business up well as an investment proposition.
Conclusion: Scaling Your Small Business Doesn’t Have to Be Complicated
Certainly it’s obvious that the $1.33 billion acquisition by Lowe’s is a little beyond most small business owners even if they understand the lesson to be learned here. There are many ways to scale a business that don’t involve buying other companies or transforming the way you do things completely. Indeed, it’s more about growing grow at a rate that’s comfortable for you in your market niche and seeing to it that your operations keep up. By concentrating on better customers, shoring up your systems and delivering added value, you can scale such that it will raise your top line with a trebuchet and leave you set for the future.