Guest post by Nunzio Presta

Out the gate, many people associate entrepreneurship with the grind and hustle of building a business from the ground up. However, entrepreneurship can be achieved through buying an existing, established business. This can come in forms of purchasing a minority stake in an existing business or franchise, a management buyout, or the outright sale to a third party, nevertheless, no matter how you cut and paste it, we call this “Entrepreneurship Through Acquisition”. This term will become more and more popular as we are seeing an influx of people transitioning from the traditional 9-5 and looking for established opportunities that they are passionate about, and opportunities that suit their lifestyle. Many baby boomers (retired 9-to-5’ers who are young at heart looking to fund their retirement) and millennials (sick of the 9-5 lifestyle) are looking to transfer wealth by investing and purchasing minority stakes in businesses that provide them with a blue print for success. With that said, lets take a deeper look into entrepreneurship through acquisition:

What is it?

Entrepreneurship is not only about starting a business from scratch but also about growing an existing business into something even better. Royce Yudtoff, a Harvard Professor and co-author of Buying a Small Business: Think Big, Buy Small – Own your own company, mentions:“If you are a manager thinking about making a change in your career or a newly minted MBA looking to begin a management career, this is an opportunity you should consider: You can buy an existing business, right now, and run it as CEO. We call this entrepreneurship through acquisition.”

Is it right for you?

If you are a person that values independence, being rewarded for what you do, learning and can handle the challenges of not having a regular salary with benefits, the pride for working with a big brand, having a community of colleagues or abundance of resources and infrastructure, then entrepreneurship through acquisition is for you! You’ll need to have a convincing attitude coupled with confidence and persistence in order to grow an existing business into the business you think it can be. Just like Howard Schultz turned Starbucks into a global empire, you too can turn a small business into a global empire that adds value to the world.

Pros

  • Existing customer base ready to hand over money.
  • Short return on investment timeline since the business is established and should have recurring revenue.
  • Processes are in place in order to provide a turnkey operation.
  • Proven and tested market – that’s why the business is still in business.
  • Reputation – the business may (should) have high customer satisfaction in which you can benefit from.
  • Cons

  • Generally, a large amount of cash (liquid or financed) is necessary to make the actual purchase.
  • The search process can be expensive, as you will need to budget for loss of wages, accounting services, legal fees, and other fees.
  • You may have to renegotiate or honor any contracts that are already in place with the current owner.
  • You may need a significant amount of working capital to aid cash flow.
  • You may not uncover the real reason why the existing owner is selling.
  • Reaping the financial opportunity!

    If you find a business that you are passionate about and suits your lifestyle, that’s great! But, the real kicker is if the business has recurring annual returns. Once you consider how much you will be buying the existing business for (liquid cash + financing [interest]) you can quickly calculate an annual return on the investment. Frankly, buying into an existing business can yield better returns than most traditional investment vehicles. Beyond financial reward, this can also give you professional independence and personal fulfillment.

    What kind of existing business should you be searching for?

    Harvard Professors Royce Yudtoff & Richard Ruback said it best:

    “An enduring profitable small business that is established and growing slowly with recurring loyal customers.”

    They hit the nail on the head!

    Where can you go to search for a business or franchise to buy?

    Well, without being biased, BizON is committed to redefining how people buy, sell and grow businesses or franchises in the digital world. The marketplace is doing a great job attracting and connecting engaged buyers and sellers by providing them with a positive user experience that is seamless, resourceful and supportive.

    In the end, whether you’re over 65 or under 65, loving what you do is extremely important, and entrepreneurship through acquisition is the answer that many are looking for.

    Nunzio Presta: Ex pro athlete turned entrepreneur. Founder & CEO at BizON, an online marketplace where people can buy, sell and grow businesses or franchises every day. He is a thought leader on digital marketing & entrepreneurship through acquisition and a mentor to many entrepreneurs, small business owners and franchise owners. Nunzio graduated from the Ted Rogers School of Management at Ryerson University with a Bachelor of Commerce.