Going Horizontal (Part 1)

Simply put, Horizontal Integration is growth by acquiring competitors.

It can be more nuanced than that, but in most cases it would mean simply buying a competitor and merging the businesses together.

Horizontal Integration is a long game with a long-range return on investment, but it can be a fantastic way to grow your business – especially if you’ve really “figured it out”.

If you have a competitive advantage, if you have better marketing, sales or operations, if you have a more notable or trustworthy brand than your competition, then this trail will be a great way to add value to an acquisition right away.

You get their book of business, their supplier relationships, existing customers and their team, and you can apply the strengths of your business to all of that to make both of them better.

Now the idea is nice, but the execution of this trail can be tricky.

First off, if you have a contentious relationship with your competitors then that creates a major hurdle right away. You may need to look outside of your region for a good business to buy.

Even then, it’s a tricky conversation to start.

In the business broker world, they say that people aren’t ready to sell their business until they encounter one of the “Three D’s”: Death, Disease, or Divorce. I have also heard of Disenchantment, Dullness, Distress, Departure, and Disagreement being added to that list.

Horizontal integration isn’t for the weak, but it’s an amazing way to grow.

This is from Trail 11 of Profit Hiker: 11 Trails to gain lasting elevation in your business. Find the book right here and the program over there.