Rural Economic Business Acquisition and Relocation Strategy (REBAR) is a preferred method of economic engagement to bring new business activity into Northwest Oklahoma. The following Factors must be evaluated to determine if an out-of-state business is a suitable candidate for the REBAR Strategy.
- Factor: Utilization of Northwest Oklahoma Agricultural or Natural Resources
The higher the use of Northwest Oklahoma resources, the higher the target business scores on this factor.
- Factor: Industry or Niche is Growing
The higher the growth of the target business' industry or niche, the higher the target business scores on this factor.
- Factor: Market Leadership in Niche or Industry
By being a market leader, the target business will score higher in this factor.
- Factor: Customer Base is Diversified or Contracted for Stability
The target business should not rely upon a few major customers without a strategy that keeps customers loyal. Ideally, the target business should have a diverse blend of customers to score high in this factor.
- Factor: Owner/Management Available for Transition Period
After a business is acquired, the ownership or management should be available for specified period to ensure a smooth transition. Sometimes this period can last for several years to ensure customer relationships are maintained and to ensure that the ownership or management does not engage in competive activities that could be detrimental to the newly relocated company.
- Factor: Management is Identified and Available
In any new business, management will determine the success of the business. In a business acquisition and relocation, experienced and motivated management must be in place to ensure effective business operations and growth.
- Factor: Business Size is Manageable
In many smaller Northwest Oklahoma communities, smaller size new businesses are more appropriate to ensure adequate supply of employees, housing, and infrastructure can be provided for the new business. Also, smaller businesses are often easier to capitalize due to the lower level of funds required for acquisition, relocation, and operation.
- Factor: Customer Base is not Adversely Concentrated Geographically
Outbound transportation is often a negative cost factor for Northwest Oklahoma businesses compared to their competitors in higher population areas. Northwest Oklahoma is in a good position for those products that are distributed somewhat evenly in population areas in the United States. Those businesses that have customer bases that are concentrated in a single region far from Oklahoma are not good acquisition candidates unless plans call for expanding distribution to other regions of the country.
- Factor: Relocation Should Not Be Adversely Disruptive
If an acquired and relocated business is irreparably harmed by the process of relocation, the business is not a good target. Some businesses require continuous attention to inventories and customer interaction. If the relocation process cannot provide adequate inventory control and customer service, the target business may be adversely disrupted to the point where it is permanently handicapped.
- Factor: Business Should Operate Better After Relocation
A feasibility study of any targeted business for acquisition and relocation is necessary. An accurate model based upon past financial data and forecasted operations will be able to provide an idea for potential investors if an acquired and relocated business will operate better in Northwest Oklahoma than in its former location.
- Factor: Business Should Be Profitable or Capable of Profitability
Ideally, a target business should be profitable to demonstrate that a return can be obtained for its investors. The positive benefit of evaluating an ongoing business is the availability of past financial information that indicates the viability of the business. Some target businesses have most of the right elements for success such as generous gross margins and proprietary technology, but have not reached a level of revenue that it requires for profitability. Those companies can be obtained at a discount and can be very successful provided the acquiring entity has a solid plan to obtain profitability through management and marketing.
- Factor: Owner Should Have a Valid Reason for Selling
Over one million businesses in the United States are offered for sale each year. Roughly one third are sold to buyers. Of the other two thirds that are not sold, approximately 50% of those businesses cease operations within one year. In other words, many companies are distressed and are seeking buyers to remedy their past performance or to augment shortcomings within their operations. Ideally, a small business is put up for sale because the owner is approaching retirement age and that owner has not identified a successor to purchase the business from her or him.