Though many commentators insist it is not a realistic goal, business information company Bloomberg LP is reportedly considering the possibility of acquiring a major Web property like LinkedIn. Growing a business through acquisition of other businesses or expansion can be one of the most important tests of effective leadership. Today we’ll look at what goes into these decisions and more about the importance of leadership in your organization. Take a look:
Rumor has it. Whether acquisition of LinkedIn is just a pipe dream or is actually being considered in the Bloomberg camp, the reality is that such a purchase would represent something completely different for the multimillion dollar business network Michael Bloomberg has built thus far. LinkedIn is a full-blown social networking site with a giant non-paying user base rather than a subscription-based service for business leaders like Bloomberg. The question every business owner must ask when expanding is whether the new direction they choose fits their vision. Seeking Alpha
Decisions, decisions. In Bloomberg’s case, many would argue it does not. Start with the incredible expense of purchasing a company like LinkedIn (even with Bloomberg’s considerable resources), move on to what some see as an incompatible business model, and finish off with the differences between Bloomberg’s and LinkedIn’s core technologies, and columnist George Anders believes you won’t have a winning combination. When looking at expansion, all business owners must decide if it makes sense. Forbes
Plan it all out. Like any other major move your business makes, expansion needs a good business plan to succeed. Here Leslie Truex suggests creating a document mapping out a company’s history, successes, and accomplishments. The plan should also include your company’s existing equipment, facilities, and personnel, and look at what new tools, facilities, etc. will be needed for expansion. The plan will start giving you an idea of where you are, where you hope to be, and the potential costs and benefits. The Houston Chronicle
Invest in human capital. No matter what the size of your company (whether you operate as a solopreneur with just one employee or a company with many), developing human capital can be a hugely important aspect of expanding your business and your company’s capabilities, says blogger Jenny Bhatt. This means investing in knowledge, networking, experience, and even healthcare to keep your company growing, even if your only human capital is you. Free Agent Economics
Never give up on your dreams. No matter where your business expansion takes your company, a question you must ask yourself is whether the new direction fits in with the reason you started your business in the first place. Hopefully your company is more than simply a means to an end. It is the fulfillment of a dream. And dreams, says training manager Shola Richards, are something we must never leave behind, no matter what the opportunity. Cubepiphany
Leadership Learning Curve
Be ready to refurbish your brand. Business expansion will require some changes to the way you do things, and if you are acquiring a new business, some changes to the way that company does things too. After making some adjustments, you may need to refurbish your company’s brand or the brand of a new company you’ve acquired. Diana Pohly makes some suggestions using a different example; Ford Motor Company’s efforts to resurrect its Lincoln brand. Here are some lessons about repositioning or reestablishing your brand in a changing market. Step By Step Marketing
Learn leadership from a zombie TV show. And speaking of bringing things back from the dead…Your expansion will require great leadership skills, just like running your business does. But don’t waste your money on a bunch of how-to books on leadership to brush up. Believe it or not, Gary Shouldis insists, you can learn everything you need to know about leadership from this show about zombies who have come back from the dead, and the humans who must fight to survive in their world. Enjoy! The Small Business Playbook
More in: LinkedIn
This would be a monster deal if it ever went through, but at this point its more rumor than reality.
As far as small business mergers and acquisitions are considered, I think small M&A is a lot different. It’s less risky, less cumbersome, and a whole lot less money.
I’m in the process of buying a neighborhood bar, and there are a few questions I asked myself to increase the chances of making it the acquisition successful:
1) How can I lift sales?
2) Is there waste that I could cut to save money?
3) What am I actually buying (location, license, brand name, customer list, R&D)?
3a) Can I just start a similar business myself and bury this company?
My point is you can’t buy something and maintain the same revenue level, cash burn rate, or business model (unless you can get it at a discount). You have to know where the additional value will come from. That’s the problem with the Bloomberg-Linkedin deal, how would Bloomberg create new value?