It’s no secret that times are hard for the UK’s SMEs at the moment. Even for those that aren’t facing imminent peril from the threats of COVID-19 lockdown or Brexit, the problem facing high-potential SMEs is how to generate growth with the economy in a state of paralysis.

With the UK set to reopen over the next few months as the vaccine rollout progresses, some SME owners will understandably want to turn their thoughts from survival to growth. But, with government spending largely focused on keeping struggling firms afloat, growth is no easy feat.

One of the few avenues for growth currently available to high-potential SMEs, then, is acquisition. That may sound somewhat outlandish for companies who are struggling to generate revenue during the pandemic. But, as we’ve covered previously, you don’t need a huge pile of cash sitting around in order to make acquisitions.

In fact, with business distress so widespread among UK companies, there has likely never been a better time to make an opportunistic acquisition and, with an economic recovery surely only months away, an acquisition could be the perfect way to boost cashflow.

Furthermore, given the nature of COVID-19’s impact, making an acquisition that diversifies your business offering could be the key to unlocking that much-needed growth. Here’s how diversification through acquisition can boost your business and enable you to grow post-pandemic.

Crises change consumption

There’s no denying the fact that crises of all sorts change customer behaviour. COVID-19 is of course no different, driving booms in sectors such as e-commerce, cybersecurity and logistics that are likely to be permanent.

With such sectors populated by large numbers of SMEs, taking a bet now on a small company with high potential but in dire need of investment could reap huge dividends as the economy reopens, even if they are in a different sector.

Diversifying your business offering means that you are reacting to the changes wrought by COVID-19, rather than merely looking to return to business as usual.

Quicker growth

Making diversifying acquisitions is a quick way to expand and begin growing your business. This is certainly the case in comparison with an acquisition strategy exclusively targeting organic opportunities in your own sector.

While you will still obviously need to be rigorous in conducting research and due diligence and then integrating the target company into your business, seeking acquisition opportunities outside of your industry can greatly increase the scope for you to do deals (and reap the rewards) more quickly.

Opportunities everywhere

UK business distress is at an all-time high as a result of COVID-19, with thousands of businesses only managing to survive thanks to government support schemes. Clearly, this is not good news for the UK economy, but it does mean that, for those in a position to buy a business, there has likely never been a better time.

Given the widespread nature of the cash flow problems afflicting UK businesses, firms across all sectors will be in need of investment in order to stay afloat and will be more open to an acquisition as a result. Therefore, opportunities to pursue deals outside of your core sector will be readily available.

Unlock new synergies

Acquiring a business in a sector outside of your own can have the added benefit of introducing you to a new way of working, which can have a positive impact on your core business and vice versa. Buying into a new sector will allow you to access new skills, new knowledge and new resources that can boost profitability and productivity and improve your resilience to problems.

What’s more, if you make a diversifying acquisition that you are then able to successfully integrate into your core offering, you can develop a competitive advantage over other businesses in your sector.