Our firm works regularly with manufacturers on strategies for growth and diversification. While there are many strategies in the quiver, one that is often overlooked is “vulture capitalism.”
Let me describe it this way. You’re in an industry that is contracting. When you look to the left and look to the right, you know that those two competitors won’t be there in a few years. Your goal is to be one of the firms that remains standing.
Here’s where vulture capitalism comes into play. If you’re in an industry where competitors are routinely going out of business, you may choose to have a business strategy in place to swoop in once the closure is announced and to take over as much of their (profitable) business as you can.
How can you take advantage of this approach?
- Listen to the rumor mills. Keep close with your OEMs and supply chain as far as who’s on the brink.
- Keep friendly with your competitors, even if it’s at arm’s length. Know the leadership there.
- Once a closure is announced, contact the company and let them know you’d like to take on any customers you can (that fit your parameters – not just anything!).
- Contact channel partners and known customers of the company as well, and offer them an easy sign-up, easy switch over, and any forms they may need to transfer molds, etc., to your firm.
AS I SEE IT, it may not be polite to think about a competitor’s failure, but you’ve got a business to run. Anticipating how you can help that soon-to-be-former competitor transition out of business puts you in a position to swoop in and selectively gain new business that will help your own company grow.
Interested in exploring if a vulture capitalism strategy makes sense for your company? Ady Advantage’s strategic consulting services for manufacturers can help you determine if this would be a good option, and if so, craft a strategy that will allow you to take advantages of opportunities as they arise. And if vulture capitalism doesn’t make sense for your company, we can help you identify other growth strategies that do. Contact Janet Ady for more information at 608-663-9218.