Entrepreneurship by Acquisition – Planning Your Search

Part 1 – Develop your criteria to utilizing in evaluating acquisition targets

Contrary to what most people believe, being an entrepreneur is not just about making money, and is it not purely about starting, owning, and running a small business to create value – it is a way of life and alternative to the model of go-to-school, get-good-grades, and get-a-good-job. Entrepreneurship has historically been defined as a process through which individuals identify opportunities, allocate resources, and create value. This creation of value is often through the identification of unmet needs or through the identification of opportunities for change. But in this current economic with a dramatic decrease in consumer spending, tight lending (or access to capital), budding entrepreneurs will (or should) seek success by identifying opportunities for change with existing businesses.

The current crop of new entrepreneurs, many because of the dismal job market, will become an entrepreneur by buying a business, managing that business, growing it, and they view this as a career decision in lieu of (or better than) working for someone else.

Buying a business has always offered advantages over starting one for seasoned professionals, but currently those advantages or even greater. Some of those advantages are:

  • Proven concept, business model, products or services in place
  • Cash flow (and hopefully recurring revenue) from day one
  • An existing customer base, contracts and, vendor relationships
  • Existing staff and management
  • Transition of knowledge from the seller (current owner) please visit:- https://newsobuzz.com/ https://munonews.com/ https://loinnews.com/ https://lawcyberpunk.com/ allows the buyer to learn about running the business, which helps in gaining an insight about their experiences and also the expertise needed to keep the business competitive.
  • Brand or reputation – existing goodwill is associated with the product/service, name and location.
  • Lenders or financiers are more willing to lend money to an existing business with a track record.

If you’ve bitten by the entrepreneurial bug, you can either start a business from scratch or buy an existing operation. However the risks associated with starting a business from scratch, which has always been great, are much more frightening during economic times like we’re now experiencing.

Developing Your Criteria

Your first step in the buying process should be clearly defining the criteria you will use to select a business. Write out these criteria, continually refine it, and use it the screen businesses during your search. This will guide your search process, save you time, and ensure you’re using an objective approach (non-emotional) in your search process. Your criteria can be developed by answers some questions concerning you and what you want in a business:

When do you want buying the business?

  • Remember if this is a goal is needs to be time specific

Why are you buying a business?

  • Do you plan to manage the business?
  • Do you just want to be an investor?
  • Are you buying a job or lifestyle?

What factors about a business or industry are most important to you?

How much revenue should the business be producing?

How large of a company do you want to run?

How important is the growth potential of the company or industry?

  • How large of a market area and market potential is desired

What is your price range for buying a business?

  • Complete a financial statement on yourself, determine how liquid you are, identify your sources of capital, and determine if you can leverage other sources of capital?

Determine what industries you’re interested in and also indicate those you will not pursue.

  • You should first assess your background, skills, interests, and education.

Answering these questions will result in a well defined criterion to utilize in screening opportunity during your search.

Following is an example of a well thought out criteria that a buyer actually used in a search and also used it as a mailing to business brokers and small equity funds:

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