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How To Merge Two Businesses Successfully: Issues To Consider

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Merge two businesses

How To Merge Two Businesses Successfully: Issues To Consider

Merge two businesses

To merge two businesses successfully, you need to have very good knowledge of both businesses before you can archive such.

You consolidate two businesses into one when you merge your business with another business. Here, all the businesses involved in the merger join their assets, staff, and other resources.

Both businesses will form a single legal entity, and things can go well, or the times ahead can be difficult. Everything depends on your level of preparation before the merge and the communication between the businesses.

Also Related: How to avoid bad debts in a business 

The aim of this article is to provide you with tips on how to merge two businesses successfully. Before you indulge in any business merger, there are certain questions you must have answers to. Such questions include the following:

  • Should you sell your business to another business instead?
  • Will the merger improve your business?
  • What are the benefits of merging another business with yours?

Your answers to the above questions will help you successfully merge two businesses. Keep reading to know more about how to merge or combine businesses and the important steps involved in the process.

Overview of Business Merger and Acquisition 

One of the important steps to take during the process of a business merger is to consult a merger and acquisition expert. First, you will need to know the best sort of merger that will be perfect for your business.

Should you own multiple businesses or companies, you can decide to merge them into a single entity. Another available option will be for you to buy an existing business and join it with your own business. There is also the third option where you can sell your business to a larger company.

You need to understand that the type of merger is greatly dependent on the connection or the relationship between the two companies.

Different Types of Business Mergers 

  • Conglomerate merger

This is the type f merger that takes place between two companies that have little or nothing in common.

For instance, a sports company might consider a merger with a healthcare company. At first glance, a conglomerate merger might make little sense, but a critical analysis shows that it reduces business risk for both companies by diversifying their industries while allowing each of them to grow.

The two companies might be seemingly unrelated; they can support each other with their products and services.

  •       Vertical merger

This kind of merger is seen between businesses or companies in the same industry. Most times, companies focus on different stages of the production process. An automobile company might merge with a haulage company.

  • Horizontal merger

For a horizontal merger, two companies or businesses that provide identical or similar products come together.

The two companies are often direct competitors and serve the same market. A very good example is the merger of two software companies.

The advantage of the horizontal merger to the companies involved is that it reduces competition and inefficiencies within both companies.

Also read: How to hire the right employees for your business 

  •       Concentric merger

This is the type of business merger that involves two companies with different products but has the same customer base.

A very good example is the merger between a primary healthcare company and a pharmaceutical company.

Tips on How to Merge Two Businesses Successfully 

Here are the major issues to consider before you settle for a business merger or acquisition.

  •       Analyze the health of the businesses or companies involved in the merger  

Before you agree to merge your business or company with another company or business, it is imperative that you assess the health of the companies involved.

You need to ensure that they are financially capable of going through the merger. Examine the liquidity of each company involved to ascertain if the company has enough capital to complete the merger transaction as well as enough capital to stay afloat at the end of the merger.

You need to do your due diligence on the company or business you are merging with. Critically analyze each company in terms of strengths, weaknesses, and the perception of the public about them.

Without good information about a business or company, you are at the risk of testing the waters with both feet.

  • Have set out goals for your merger

After you are convinced that the company or business you want to enter into a merger with is in good shape financially and otherwise, then outline the things you wish to gain from the merger. You must have a reason for entering into a merger in the first palace.

When you have a clear set goal, it will help you determine the type of merger that is best for your company or business. Do you wish to expand into a new market or increase your customer base? Are you looking to reduce the cost of production?

Do you wish to streamline the workflow of your business? These questions will help you in identifying reasons for entering into a merger in the first place.

  • Outline the terms of the merger

This is the time to figure out how the merger will go. Are you going to change your business or company and operate under a unified name?

Will your company retain its name while the other changes theirs? What is the information to be revealed to each other in the merger?

What are the exit strategies in place should there need for one in the future? For you to merge two businesses successfully, you have to determine the terms beforehand.

  •   Develop a purchase and sale agreement 

This should be the responsibility of your attorney during a business merger. Although you already the letter of intent that has the basic outline of the deal, the purchase and sale agreement is more detailed.

The purchase and sale agreement should include the names of the companies involved, the asset and liabilities of the business, the conditions of the sale/merger, how the merger will be financed, the business operational model, etc.

  •   Create an internal merger transition team

This team will help you ensure that the businesses merge successfully without any hiccup. Their job includes identifying possible cultural clashes and solutions as well as provide leadership to the companies as they gear up to join together.

The transition team ought to include people from both businesses and preferable those with management and leadership experience.

  •   Work through the integration of the company

After all the logistics have been settled, the merger is not yet complete. The last step is to fashion out ways to integrate the business, and it comes with a trial and error process.

There are certain things you may add, and the integration might seem difficult, and there are also other things that will make company integration run smoothly.

You simply have to try and see for yourself. Employees will adjust to new ways of working, and the transition team will be faced with myriads of obstacles as well.

Conclusion

You have been provided with tips on how to merge two businesses successfully; all you need to do is put it into good work.

Make no mistake; a business merger is not a stroll in the park. You have to put in the work before you can get the job done properly.

I would love to get you thought about the topic, kindly make use of the comment box provided below.

 

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How to Start Buying from Aliexpress and Make Money

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Are you looking for a good business idea that will bring you some cool cash within a fairly short timeframe? Then you should consider buying and reselling goods (importation) from Aliexpress.

What is Aliexpress? Why Should You Use It?

According to Wikipedia.org, ‘AliExpress is an online retail service based in China owned by the Alibaba Group. Launched in 2010, AliExpress is made up of small businesses in China and other locations like Singapore that offer products to international online buyers. The Company (AliExpress) facilitates small businesses to sell to customers all over the world.

How to Start Buying from Aliexpress and Make Money

How to Start Buying from Aliexpress and Make Money

You might be wondering if it’s safe to buy from Aliexpress. Well, it is very safe to buy from this Chinese site in fact, safer than buying from other e-commerce websites you might know of or that you are used to. This is because in Aliexpress, you are protected no matter what you buy as far as you buy it directly from the site.

Again, why this is so is because, most of Aliexpress suppliers who list their products on the site are legitimate. Hence, it is very safe and reliable to buy from Aliexpress. But there are still a few bad eggs on the site of which you should be aware of and refrain from.

Why Are Products So Cheap In Aliexpress?

A common question asked by many people is, “Why are products so cheap in Aliexpress?” this is a genuine question because many people think that most of the products on Aliexpress are not of high quality because of their low prices but this is very wrong!

Aliexpress products are cheap because most of the merchants selling products on Aliexpress are based in China. Since most of their products are manufactured there (in China) and this is not done by a few companies but hundreds of companies, the market forces significantly bring down the price of goods.

Besides, the cost of production is relatively cheap, China has a lot of resources to deploy easily plus ready technologies which significantly reduce the production cost. Finally, given its huge population statistics (Over 1billion people), the cost of labor is cheap too. When combined these ergonomics help in pulling down the price margins for goods compared to other parts of the world. These and more reasons account for why most of the products made in China are Cheap.

The Two (2) Modes of Buying from Aliexpress.

There are two ways of buying and reselling goods from Aliexpress namely (1) importation business and (2) dropshipping. each of these ha its advantages and disadvantages. In an earlier article, I did an in-depth analysis of what these two (2) forms of buying from Aliexpress entail, their pros and cons. Do well to check the article here.

For more resources on importation business in Nigeria, please read this free guide where I explained this subject matter in detail.

You should also check out my additional guide on how to start dropshipping business in Nigeria.

For this guide, my focus is on both importation business and dropshipping. The section below shows a summary process for buying from Aliexpress and reselling whether you choose importation business or dropshipping or both.

Step-by-Step On How to Start Buying from Aliexpress and Make Money

To start buying from Aliexpress to sell and make profits, here are some tips to help you:

(1) Choose a Specific Niche.

Choose a very targeted group of products that are always in high demand all or nearly all the seasons. This is called the target “general” niche. After choosing a target niche, proceed to choose a good category (that fits your interest) from that niche. For example, you can choose “Ladies’ Wears” as your target niche then choose “Shoes and Bags” as your category.

(2) Compare Shops Offering Products In Your Niche.

If you choose ladies’ wears as your niche, for example, then you should visit some shops in your area (or in your town and/or wherever you want to sell to) to see the kind of ladies’ wears that are trending at the time. Once you’ve known what sells, go to Aliexpress and check if you can find the product there.

If you see the products, begin checking for and consulting or checking with the sellers or suppliers of the products on Aliexpress. While doing this, please make sure that your prospective Aliexpress supplier is reliable. You can check reviews from his previous customers to know if he/she is worth doing business with or not.

(3) Order Samples.

Before you start bulk-buying what you are going to resell, order some samples. This will enable you to know whether the products are good or not. Also, it will open your eyes to the time taken before products are delivered.

(4) Buy the Products, Market It.

After you’ve ordered the product  samples, tested and found them to be market-worthy, the next thing you have to do is to go ahead and start buying the products for sale. However, understand that your brand will not spread if you don’t advertise it effectively.

There are many ways to advertise or market a business. If you make a website to use for your advertorials and marketing, make sure it is customized and that your product’s pictures are of high resolution. You can run Facebook adverts (ads) or contact social media influencers to help you promote your brand.

(5) Focus on the Welfare of Your Customers.

Nothing much to say here than this, “take your customer’s welfare and user experience seriously and reap continuous rewards. Neglect this and sit back to lick the consequence”. That’s self-explanatory enough. Isn’t it?

Conclusion

To start buying from Aliexpress and reselling to the local or international audience, make sure that you buy what is trendy and in high demand else you might end up not getting customers and run into severe loses. Ladies wears and fashion items are good categories to choose because there is always a new trend that sells like hot Shawarma and the demand is always high. I wish you the best of luck in this industry. Thank you for reading.

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