If you’re trying to grow your company primarily through marketing (or what I call organic marketing), you’ll be pleased to learn there’s another tried-and-true way to accelerate the growth process, especially if you have the right stuff in place.

That way is to acquire other companies. In other words, you buy your way to growth. 

Why acquisition? It’s about instantly acquiring a lot of customers who are already trained to buy from that company, whereas organic marketing is just a wish and hope that they’ll see it and respond to it. 

This doesn’t mean you can stop your other marketing. You still need what I call the three rights of marketing:

1. The right amount of calls
2. From the right customers
3. At the right time

Acquisition, though, will rapidly increase that pool of the right customers so you have a larger base. That’s not all. You also could acquire the company’s goodwill and sometimes its assets such as trucks and inventory or even the building and key talented people many times.

Wait, Al, we’re not a giant company. Can we still make acquisitions? The answer is yes, absolutely. 

Remember, you’re not competing with companies paying high dollar because they’re not interested in the smaller owner-operated contracting businesses you’re after. Even contractors with five to seven trucks are typically too small for them to bother with. 

From your perspective, however, adding seven trucks could increase your revenue by $2 million a year or more, depending on how good a job you do. 

The other thing that happens is economies of scale rise; you’ll make more money that way. For example, you won’t need two sets of customer-service reps.

However, there is a catch. Successful acquisitions hinge on your ability to take on new people and train them your way. Success leans heavily on documented systems, processes, and procedures so you can add staff and have them do things your way. 

Hub and spoke

Here’s a funny story: I was on a podcast talking about systems and procedures where the hosts laughingly told me they once opened another office right next door to their original office. They said it may as well have been across the country for how differently it operated!

Another reason for an acquisition is when your ideal customer lives in a place that is an hour or more away. In that case, your main office becomes the hub, and the acquired company becomes the spoke. It’s like a beachhead you can market around. 

Acquisitions also allow you to take competitors out and gain expertise in trades you don’t do. Understand that you’ll have to expand your training program to accommodate the new offering(s). 

With documented processes, the right training and a well-trained field supervisor, the spoke will run just like the hub. 

Your ability to play will be dependent on the following:

• How much money do you have?
• How documented are your systems and procedures?
• How well can you train and retrain people to scale?
• So, how would you buy someone else’s company?

As I said, the first step to acquisition in the best way is to ensure you have systems in place so you can grow as fast as you want. If you don’t have systems, you won’t be able to retrain staff and get them working your way. No systems? Start putting some in place that can allow for potentially explosive growth today.

If you already have systems, you’re ready for acquisition. It’s a spectrum that goes from mild to wild, so see which one of these seems most doable to you. You can always get wilder in subsequent deals.

Mailbox Money

Acquire inactive phone numbers that contractors who went out of business never disconnected and get those abandoned phone numbers to ring at your office. (That’s pretty mild but still great.)

Offer to buy the phone number from a contractor who is going out of business and closing the doors for a low flat price.

Offer the owner/operator of whose business you want “Mailbox Money,” a term coined by my fellow business consultant, Ellen Rohr. In this model, the owner stays home, and when a call converts to a sale at your shop, they get a percentage dropped into their bank account or, less frequently now, a check for the percentage in their mailbox. 

You pay the contractor you’re acquiring a percentage of sales from calls that originate from their designated phone number that end up as a sale. This deal typically remains in effect for just one year.

The Hybrid Mailbox Money model is where you offer to get the acquired company’s phone to ring at your office. You pay the former owners a small, flat, upfront fee for that and a percentage of the call when it closes within a set timeframe, such as one year.

Balloon Mailbox Money is similar to Hybrid Mailbox Money, except payment comes with a bump (balloon) if sales exceed what you both agreed the minimum annual sales would be.   

That would happen only once and usually after you tally up sales for the first year.

Getting wilder, you can buy a company outright, shut its office down and put it all under your roof. 

You typically pay the outgoing owner a percentage of gross sales over three to five years. He keeps the assets (trucks, building) and you acquire the phone and the customer list. His staff can apply for a position with your company without a guarantee of employment.

Traditional Acquisitions

You can also do what most people think of when they think of acquisition, which is to buy the company outright and operate in its location. 

There are three ways to do this: 

1. Lease their property and building.

2. Lease the property and building with first right of refusal. For example, you get first dibs to purchase everything if the owner(s) ever want to sell.

3. Outright purchase the property and building. In this scenario, you pay the seller/contractor a percentage of gross sales over three to five years. You also keep all the assets (trucks, stock, etc.) and acquire its customer list. You might also add a noncompete agreement tied to a level and length of employment for the owner, but with no guarantee of long-term employment.

Many successful contractors I’ve worked for originally worked at the company they ended up owning. Usually, it was because the prior owner(s) had no one in the family who wanted to run it or that they trusted to run it the right way. They had a goal to sell it and not have to come back to rescue it. When a sale of the company to an employee is done right, it can be a win-win.

You might think that it’s not a good time to buy a company with a recession on the way. 

Here’s the thing: You may find that now more than ever, some owner-operators would be glad to sell rather than go through the slower times, face going out of business and end up with nothing. In this case, depending on the size of the company, you may offer to make one of the Mailbox Money-type acquisitions and see what happens.

Do check with your own trusted advisors, as there are many things to do. In my personal experience, if they are done right, it’s well worth the effort.