Note this is a leaf out of Larrys book and I am merely trying to pay it forward.
I have just recently been involved with an associate helping a client with a joint venture and the drafting of a Memorandum of Understanding to be handed to the legal guys. A post from Tod about the availability of second hand machinery becoming more available got me thinking that some of the Professional Woodworkers out there that are part of the Family Woodworking Forum might benefit from this advise given the tough times many businesses are going through. I hate to think of guys selling machinery to pay the bills. So here goes.
Being in a small business can be very rewarding but also challenging especially when tough times hit. One option you might want to seriously consider is an acquisition, merger or joint venture with someone else in the same or very closely aligned business especially if they are a similar size to you.
Rather than continue to try and be chief cook and bottle washer and do everything yourself, when the times call for a much more dedicated and focused approach to certain aspects of the business, consider the potential benefits of a partnership, merger or joint venture.
Don't poo poo the idea, I can visualize several of you saying being there done that and aint going back there again. But sometimes survival may depend on it. Tough times are a good time for consolidation. You will see several industries doing this in the coming years in order to survive.
I know it has a negative side but it need not be. Things usually go sour only if the two parties to the agreement did not sit down and trully examine all the issues that face them.
For any coming together of two entities there has to be a clear understanding of the intent. Just like a marridge. The better the expectations and planning that are done before hand the better the chance of success.
Here are some of the more positive points you might want to consider if you find this idea attractive.
1)Reduced overhead you don’t need two accounts departments or two accountants etc or two premises.
2)Increased income over which to amortize overheads
3)Potentially another partner where one can focus on operational efficiency and the other on sales and marketing. Sharing the load of running a business.
4)Potentially a reduction in cost of sales as a result of high volumes of purchases from the newly combines operation.
5)Greater customer support leading to more satisfied customers. This comes about because of the dedicated roles the two new partners take on.
6)Reduced competition thereby preserving margins to some extent.
I realize this is a woodworking forum but since I am a hobbiest woodworker I dont have the skills to help the Professional Woodworkers out there with their projects. What I thought I would do is use my business skills to offer some advice that might help some Pros struggling at present in return for all the contribution they make on this forum. I would hate to see a real pro having to chuck in the towel on his woodworking business when a merger with a guy down the road could have helped them both.
There is more to this than what i have written here but if any Pros want further input don't hesistate to PM me and I will see if I can help you. Small payback for what you do for all those who benefit from your advise here.