Merge Your Culture, Aquire Your Success | John Bly | TEDxBryantU
Summary
TLDRThe speaker shares his entrepreneurial journey, emphasizing the importance of growth through mergers and acquisitions for small to midsize businesses. He challenges the notion that only large corporations and private equity groups should innovate and grow in this manner. With statistics highlighting the success of acquired businesses and the potential for strategic savings, he encourages entrepreneurs to consider this often-overlooked strategy for expanding their horizons beyond traditional sales and marketing.
Takeaways
- 🚀 The speaker emphasizes the importance of entrepreneurship and innovation, sharing their personal journey of acquiring and growing businesses.
- 💡 The concept of 'merge your culture, acquire your success' is introduced as a key to entrepreneurial growth, suggesting that combining unique abilities and cultures can lead to success.
- 🛒 The speaker highlights the often-overlooked strategy of mergers and acquisitions as a critical component of business growth, alongside marketing and sales.
- 📈 Growth is essential not just for the entrepreneur but also for the company's culture and team, as it challenges people to think outside their comfort zones and innovate.
- 🏆 The speaker's experience of acquiring 13 accounting firms and four fitness businesses showcases the potential of small to midsize companies to grow through strategic acquisitions.
- 🤔 The script questions why private equity groups and public companies are historically the only ones innovating through mergers and acquisitions, suggesting that smaller companies should also leverage this strategy.
- 📊 Only 4% of companies started in the U.S. reach $1 million in revenue, indicating a significant failure rate among startups and the potential for growth through acquisition.
- 🔑 Growth through acquisition can remove the 'glass ceiling' in companies, providing opportunities for employees to specialize and innovate without waiting for others to leave.
- 💰 Acquisitions can provide immediate cash flow positivity and significant returns on investment, making them an attractive strategy for business growth.
- 🔍 The speaker identifies strategic savings and synergies as benefits of mergers and acquisitions, allowing for cost reductions in areas like rent and IT infrastructure.
- 🌐 The current market presents a unique opportunity for mergers and acquisitions due to a high supply of businesses for sale and a potential lack of demand from new startups.
Q & A
What was the speaker's age when they decided to leave their job and pursue entrepreneurship?
-The speaker was 25 years old when they decided to leave their job and pursue entrepreneurship.
What was the initial spark that led the speaker to consider buying a CPA firm?
-The initial spark was an advertisement in the back of a CPA magazine for a CPA firm for sale, which the speaker read cover-to-cover.
How many accounting firms and fitness businesses has the speaker acquired in the last 13 years?
-The speaker has acquired 13 accounting firms and four fitness businesses in the last 13 years.
Why does the speaker believe that small to midsize companies should consider mergers and acquisitions for growth?
-The speaker believes that small to midsize companies should consider mergers and acquisitions for growth because it allows them to innovate, expand their horizons beyond just sales and marketing, and provides opportunities for their team to grow and specialize in different areas.
What is the concept of 'unique ability' as mentioned by the speaker?
-The concept of 'unique ability' refers to the few things that an individual or a team is particularly good at and passionate about, which can be leveraged for innovation and growth within a company.
How does the speaker define the importance of growth for a company's culture?
-The speaker defines the importance of growth for a company's culture as a means to challenge people to think outside their comfort zone, build a legacy, and create an environment that encourages learning, innovation, and collaboration.
What percentage of companies started in the United States reach 1 million dollars in revenue, according to the speaker?
-Only 4% of all companies started in the United States reach 1 million dollars in revenue.
What is the percentage of businesses acquired in the US that are still in business five years later?
-90% of all businesses acquired in the US are still in business five years later.
Why does the speaker argue that mergers and acquisitions are often overlooked as a growth strategy by small and mid-sized companies?
-The speaker argues that mergers and acquisitions are often overlooked because small and mid-sized companies tend to focus on sales and marketing, and may not be aware of the benefits of M&A, such as immediate cash flow positivity, high ROI, and strategic savings.
What are some of the strategic savings that can be achieved through mergers and acquisitions, as mentioned by the speaker?
-Some of the strategic savings that can be achieved through mergers and acquisitions include cutting costs on rent, IT infrastructure, and software, as the combined company can avoid duplicating these expenses.
What is the current supply and demand situation for businesses in the United States, as described by the speaker?
-The current supply and demand situation is characterized by a high supply of businesses due to baby boomers retiring and controlling a large portion of privately held companies, while the demand is low due to a decrease in new businesses being started by people under the age of 30.
Outlines
🚀 Entrepreneurial Journey and Growth Through Acquisitions
The speaker shares their entrepreneurial story, beginning with leaving a steady job to pursue innovation and becoming their own boss. At 25, they took a risk without financial backing and found an opportunity in a CPA magazine's classifieds for a firm for sale. Over 13 years, they've acquired 13 accounting firms and four fitness businesses, emphasizing the importance of growth for company culture and team development. The speaker questions why only large entities seem to innovate through mergers and acquisitions and encourages small to midsize companies to consider this path for growth, innovation, and breaking the glass ceiling, which has significantly reduced turnover in their firm.
📈 The Untapped Potential of Mergers and Acquisitions for Growth
This paragraph delves into the overlooked opportunity of mergers and acquisitions for small and mid-sized businesses. The speaker presents startling statistics, such as only 4% of US companies reaching $1 million in revenue and an 80% failure rate within the first five years. They contrast this with the 90% survival rate of acquired businesses after five years and the significant job growth generated by small to mid-sized companies. The speaker also discusses the immediate cash flow positivity, high ROI, and increased valuation that result from acquisitions, as well as strategic savings from synergies and the current market dynamics favoring acquisition due to retiring baby boomers and a lack of new businesses being started by younger generations.
💼 Strategies for Small Businesses to Escape No-Man's Land and Grow
The final paragraph addresses the challenges faced by businesses stuck in the $2-8 million revenue range, termed 'no-man's land.' The speaker suggests that mergers and acquisitions can be a strategy to break through this stagnation, allowing businesses to focus on their unique abilities and avoid being overwhelmed by operational tasks. They highlight the current favorable lending environment with historically low interest rates, making it an opportune time for entrepreneurs to leverage loans for acquisitions and grow their businesses. The speaker concludes by urging the audience to embrace mergers and acquisitions as part of their growth strategy, to innovate, and to contribute positively to the economy.
Mindmap
Keywords
💡Entrepreneurism
💡Innovation
💡Mergers and Acquisitions
💡Unique Ability
💡Growth
💡Glass Ceiling
💡ROI (Return on Investment)
💡Synergies
💡Supply and Demand
💡No-Man's Land
💡Interest Rates
Highlights
The speaker emphasizes the importance of merging culture to acquire success in entrepreneurship.
At 25, the speaker took a risk by leaving a steady job to pursue entrepreneurship, against common parental advice.
The journey began with an innovative idea found in the classifieds of a CPA magazine, an unlikely source of inspiration.
The speaker has acquired 13 accounting firms and four fitness businesses over 13 years, demonstrating significant growth.
Growth is crucial not only for the entrepreneur but also for the company culture and team development.
The concept of 'unique ability' is introduced, suggesting that individuals and teams should focus on what they excel at.
Small businesses often lack the growth opportunities provided by larger entities, which can be addressed through mergers and acquisitions.
Only 4% of US companies reach $1 million in revenue, indicating a significant failure rate among startups.
90% of businesses acquired in the US remain in business after five years, suggesting并购 as a reliable growth strategy.
Small to mid-sized companies are the primary drivers of job growth in the US economy.
Mergers and acquisitions are the often-overlooked third leg of the growth stool, alongside marketing and sales.
Acquiring a company can be cash-flow positive from day one, providing immediate financial benefits.
The potential ROI from并购 is substantial, often exceeding 100% per year.
Bigger companies are worth more, suggesting that并购 can increase a company's value.
Strategic savings through并购 can reduce costs by 10-30% by eliminating duplicate expenses.
The current supply and demand dynamics favor并购 as many baby boomers retire and look to transition their businesses.
The concept of 'no-man's land' is introduced, describing businesses stuck in a revenue range due to lack of并购.
Current low-interest rates provide a unique opportunity for并购, making borrowing more affordable.
The speaker challenges the audience to consider并购 as a key strategy for entrepreneurial growth and innovation.
Transcripts
[Laughter]
merge your culture acquire your success
merge your culture acquire your success
this is a story about my journey of
entrepreneurism and how I've gotten
there in 2004 at the age of 25
especially for you
Bryant students watching I did what most
of your parents would not want you to do
I decided at that time I had a great job
with a steady income at a great company
but it wasn't enough for me
I wanted something different I wanted to
be challenged I wanted to innovate I
wanted to be my own boss
and yet with no private equity group no
backing no financial support to speak of
I had to get creative
I had to innovate and it all started one
day while looking in the back of the
most unlikely place the back of a CPA
magazine first of all nobody should be
reading those things but not only did I
read it I read it cover-to-cover
back in the classifieds those don't even
exist today so if you're a Brian Ryan
student currently you don't even know
what a classified ad is but that's where
it started I found an ad that said CPA
firm for sale and I thought wow didn't
even know they were for sale and that's
how it all began thirteen years ago in
the last 13 years I've continued to
innovate I've acquired 13 accounting
firms and four Fitness businesses with
my lovely wife who's in the audience
over there what I would tell you is that
why why are private equity groups and
public companies the only ones
historically who are innovating in this
way why are they the only ones growing
through mergers and acquisitions why are
small to midsize companies who are the
drivers of our economy not using it so
let's start with why growth is so
important when you think about growth
it's not just important for the
entrepreneur founder it's also important
for the culture of the company it's
important for the team
challenges people it gets them thinking
outside their comfort zone and it all
starts with a concept of unique ability
and when I think about unique ability I
think about there's only a few things
that most people are good at although
many people will say oh I'm a
jack-of-all-trades the reality is you're
only passionate and excited about a
handful of those things I found very
early on in my career that I was really
only good at three or three to five of
these things my wife may say I'm not
good at any of them but I found that
there was three to five that I could
wake up every morning excited about and
to do and unique ability doesn't just
mean that for that person it means it
for the whole team small businesses
unfortunately get stuck and not
everybody can follow their passion they
haven't grown it to a size that allows
everybody to just utilize their
expertise so growth can be that thing
that helps the unique ability that helps
the founder and the team get on the same
page and build that culture build a
culture through growth that allows them
to think bigger to build something in a
legacy that lasts beyond the founder
build something that grows be part of
that foundational team that culture is
really helpful when building an
organization it challenges people to
learn and grow it challenges them to get
outside their comfort zone it challenges
them to innovate it also removes the
glass ceiling in most companies there is
an existing glass ceiling that doesn't
allow somebody to raise to another level
without the company growing or the
person above you leaving that does not
sound like collaboration to me to me
waiting for your boss to leave is not
the best solution to learn and grow
however if a company is growing you know
that there'll always be opportunity for
you to fill in over here on a project or
filling over here or help with this new
customer for us that has helped us in my
firm decrease turnover by 50 percent
compared to the industry average because
we're moving that glass ceiling has
allowed people to continue to be able to
do what they want specialize in
different areas
innovate so why do we talk about when we
think about those things and growth is
so important why do we not talk about
mergers and acquisitions as one of the
strategies mergers and acquisitions is
the often ignored third leg of the
growth stool to join marketing and sales
and people just don't think about it
when you think about small companies and
they should be and I ask you how many
companies are looking to grow their top
and bottom line how many companies are
growing so fast that they're telling
their sales and marketing people to slow
down hit the brakes
we got to figure it out the answer to
those questions make it so obvious that
small and mid-sized companies are
ignoring a big part of the growth
opportunity in mergers and acquisitions
and they need to be thinking about it to
provide opportunity for themselves and
for their people and if that doesn't get
you excited about an opportunity let me
share a few statistics first only 4% of
all companies started in the United
States get to 1 million dollars in
revenue 4 percent that means that the
vast majority have already failed many
statistics show that more than 80
percent of all companies started in the
United States fail within the first five
years the remainder of that are stuck at
the smallest of all levels really self
employed without leverage and sharing
your tools with others combine that with
the second statistic which is that 90%
of all businesses acquired in the US are
still in business five years later 90%
still in business five years later and
nearly two-thirds of all job growth in
the United States since the year 2000
have been created by small to mid-sized
companies well large companies have had
cuts the net job growth really exists at
the smallest levels so those reasons
tell me that we should be thinking about
mergers and acquisitions as a growth
strategy but if those statistics don't
do it for you I'll share a few other
intangibles that
I have found along my journey of
entrepreneurism have been very impactful
the first is that when acquiring a
company not Google but small companies
when they acquire our cashflow positive
from day one right so for you Bryant
students watching this is finance 101
why would we buy something to lose money
that doesn't make a lot of sense to me
as an entrepreneur but it does make
sense in the small business base because
they do actually make more money the
next day which gives the business more
capital more availability to reinvest in
people and resources technology whatever
it might be second is that the return on
investment can be huge there's a reason
private equity groups have been doing
this for years and returning 20 plus
percent a year to their investors now
doing this on your own with your own
capital
maybe leveraging a bank the return on
investment in most cases in the small to
mid-size company is a hundred percent
plus per year return on investment it's
a pretty good ROI even with the stock
market taking a run and a recent dip I
would tell you that I would bet on the
entrepreneur all day long they changed
the world the third thing is that bigger
companies are worth more than smaller
companies so if you're running a company
of a certain size today and you're
trying to grow why not look at mergers
or acquisitions as a way to grow it
faster we already talked about the
statistics and show that the 90 percent
are still in business why not use that
and leverage it so let's say you buy a
company for three times earnings by
plugging in your current resources
growing the company you can quickly get
it and resell it for four times maybe
combining the two companies together
another thing that's really helpful in
mergers and acquisitions is that there
are strategic savings there are
opportunities to find synergies when you
own a company in you're a small business
entrepreneur there are ways to find
synergies to cut 10 to 30% things like
rent an IT infrastructure and software
costs you don't have to pay twice you
already have the infrastructure needs
when you acquire a company you don't
double that
I would challenge that that the risks
are much less than what people really
think they are and then we get to supply
and demand today is like no other in
recent history baby boomers are retiring
at historic rates and they control
nearly two-thirds of all privately held
companies in the United States over the
next ten years it's predicted that all
of those businesses will transition
whether that's they close the door they
sell they give it to a management team
or they pass it on to the next
generation something is going to happen
with those businesses so there's a lot
of supply in the market as for demand as
of July of 2016 the federal government's
own surveys and studies showed that if
we were at the lowest point in the last
50 years of businesses being started by
people under the age of 30 so where the
media believes that there are lots of
businesses being started by a young
younger generation the reality is the
studies show quite the opposite and so
there's going to be lack of demand but
there's going to be a lot of supply
which provides an opportunity for people
who are innovative and thinking about
this as a growth strategy to really take
that time and really build a business
there's a there's a great concept out
there called no-man's land it talks
about businesses that are between this
two and eight million dollar range that
gets stuck they get stuck because they
don't use these concepts they don't use
unique ability they're there to to stuck
in the weeds they're doing too many
things they're doing HR accounting
administration so many things mergers
and acquisitions can be one of those
strategies to help those small to
midsize companies grow out of that space
and today with banks and lending we're
the way it is it provides a unique
opportunity interest rates have been
ahead historic lows for nearly ten years
although they have climbed here in the
last year and a half they are still
really low if you look at what a small
to mid-size company could borrow at in
2006 that was somewhere between 10 and
12 percent today on mergers and
acquisitions they can lend somewhere
between five and six
half-percent that money goes a lot
farther and it saves the business owner
a lot an interest expense it saves them
a lot of cost and allows them to
reinvest even more in their business I
would challenge you to think about that
as the growth strategy entrepreneurs are
the drivers of our economy
they help us develop and innovate each
of you should be thinking about the ways
that expand your horizon beyond sales
and marketing beyond that to the third
leg of the growth stool I want you to
get out there build your dreams build
your entrepreneurial journey and make
the world a better place thank you
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