So You Want to be an Entrepreneur

As a serial entrepreneur, I know the struggles of building a business from scratch. I'm on my third venture, and even with the lessons I learned previously, it's still no walk in the park to build my business. While working with my clients, I've learned that there are many options for how you can be an entrepreneur. Honestly, you don't have to start a new business to become CEO of your own company. Acquisition entrepreneurship is an innovative way to become a CEO… it intersects entrepreneurship and investing. You can buy an existing small business and grow it into a middle-market company.

You are probably already thinking, “I can’t afford to buy a business.” The truth is, many established small businesses put up for sale today are no more expensive to purchase than buying into a franchise. You get many of the same benefits of becoming a franchisee because you’re buying an established business with systems, processes, revenue, and customers. Besides, you will have the ability to add your creativity, whereas you can’t do it with a franchise. 

As I work with my clients to help them build a foundation to scale their small business into a middle-market company, I see their struggles first hand. The difficulty of the start-up causes most founders to lose money and destroy their credit. 82% of small businesses report cash flow as a significant issue that impedes their ability to grow. Also, 42% indicated no market for their product or service after investing time and money into their venture.

Start-ups have a high risk of failure. You’ve heard the statistics over and over again – only 1 out of 10 start-ups make it, and more than half will fail within the first four years. Of those who survive in the US, only 4% ever exceed $1 million in revenue.  

If it sounds like I’m trying to talk you out of starting a new business, then you’re right. I am. If I can talk you out of it, then honestly, you’re not ready to walk the road ahead of you full of more downs than ups. Hearing more people saying no than you thought you could ever handle. I want to save you from some of the pain associated with growing a business from the ground up. If you’re going to do this, then all I’m saying is consider a different path to accomplish your goal. Even Ivy League business schools like Harvard University are now teaching about acquisition entrepreneurship. 

What is an Acquisition Entrepreneur? 

“Acquisition entrepreneurs start by buying an existing business instead of starting one from scratch. From there, they bring an entrepreneurial approach to build value.”

as defined by Walker Deibel in his book “Buy Then Build.”

Acquiring an established business has many benefits, including becoming a CEO from day one. You are working in a proven, viable market, so you have a strong foundation. Every entrepreneur wants to make a significant impact on the world, and this strategy positions you to do it better. The old dog with new tricks has an advantage in the marketplace. They can build upon their current market with innovations.

Once a founder has run their business for 20 years, many are ready to retire. Now more than ever before is a great time to consider acquiring an established company. Baby boomers are preparing to retire, and many have no succession plan in place. Their children often are uninterested in running the family business, so the company either closes or is sold. You could be the answer they’re looking for right now.   

I never sugarcoat anything. Even though this strategy can be easier than a start-up, it still has its unique challenges. First, you have to do your research to find the right opportunity for you. It needs to be a good fit for your expertise. You need to bring the value the company needs to grow.

Second, you have to negotiate a deal that is good for you and the owners you're buying out. You will also need a business broker's expertise that understands the entire process to help you close the deal. Take time to do your research as well.

Lastly, once the deal is closed and you transition into leadership, you must take the first six months to ensure you retain key employees and current customers. If you lose your brain trust, then you lose the momentum created by buying an established business. Without your existing customers, you won’t have the revenue needed to invest in the innovation you are bringing to the company. 

If you’ve read this far, you have many conflicting thoughts running through your mind. That’s a good thing. Don’t run from it. Let’s process all those thoughts and develop a clear plan for how you’re going to proceed on your entrepreneurship journey. Write them all down on paper.

Do these four things:

1. Take the time to think about your business idea and research any companies offering similar products and/or services. You may identify a potential business acquisition.   
2. Research business brokers, especially those that specialize in the industry you’re most interested in pursuing. Interview several before making a decision.
3. Read books and articles on business acquisition and acquisition entrepreneurship. If it’s important enough to invest money in, then you should also support the time into your knowledge.     
4. Get your money and credit in place. The same requirements exist; you will need cash as a down payment and good personal credit to get any traditional financing. If your plan includes investors, you will still need your own money to invest as well. You need skin in the game. Work with a financial professional to get ready.
5. I wish you all the best on your journey to becoming CEO, regardless of how you choose to pursue it. Just be dedicated, confident, and adaptable. Remember solutions, not excuses.

I want to hear from you. What growth strategies have worked for your business? What area are you struggling with the most as your business grows? I’m here to help you find the solutions your company needs to be successful. Send your questions and comments here.