If we study history we can save ourselves a lot of pain in our businesses.  History does repeat itself.  That’s a fact.  One of history’s business lessons is:  Bigger isn’t always better.

A good example was featured in a headline story in the Wall Street Journal recently that read:   Citigroup Takes First Step Toward Breakup.

If we go back and study mergers over the last ten years they were usually a bad idea.  A few examples are AOL – Time Warner – CNN, Kmart and Sears, the airline industry, and the department store industry, to name a few.

Whether we are talking big companies or small business what appears to be a great fit usually isn’t.  There is always a difference in company culture, sales techniques, computers and a great deal of resentment from people who were either reassigned or layed off. 

Usually when someone is selling a business it’s often because there is a problem.  Whether it is loss of profit, sales volume or just people-related issues the current owners just want to bail out.  On occasion, it’s because someone is retiring; but that usually is not the case. 

If you are going to expand your business by buying a competitor, be careful. Make sure you are not buying problems that will complicate your life and ruin your business position in the marketplace.  You could be buying more problems than profit.  Instead, it may be in your best interest to hire the best employees you can, increase your sales force and grow your business internally.  You won’t be saddled with debt or other problems that arise when buying a business. 

Owning and operating a bigger company is not always necessarily better for your overall business plans.  Ask yourself: Why are you in business? Is it a personal ego trip to say you own a business of a certain annual volume? Do you just want to be bigger thinking that is how you compete with the competition? Or are you in business to make a profit and to run the very best business possible? 

Bigger means more overhead, more debt, more people to manage, more to juggle on your business calendar every day and, I can’t emphasize this enough, more problems.  Bigger can get out-of-control if not managed properly.  That’s often what we witness when reading the daily business headlines.  Instead of profits, the business scrambles to survive.

Don’t put yourself or your business in this position.  Think before you jump in feet first to an expanded business venture – especially in the uncertain business economy we are currently experiencing.  Be as certain as you can be that it will be worthwhile and rewarding to go bigger at a time when most businesses are scaling back or simply maintaining what they have till business is on the upswing again.  Know your facts.  Know what you are capable of handling.