Acquisition entrepreneurship sits at the intersection of entrepreneurship and investing. With the right balance of those two worlds, it's a field brimming with opportunity.
Simply put, acquisition entrepreneurs apply their business-building smarts not to a fresh startup, but to buying and growing existing businesses.
In the quick-footed world of startups, it might seem counterintuitive to imagine business acquisitions anywhere near the same entrepreneurial space. After all, many acquisitions take four to six months to complete — a tough time frame for driven entrepreneurs to endure.
Further, 90% of those who venture down the buyer's path never end up closing the deal. The reason for this hesitancy — by most entrepreneurs' standards — has less to do with the field itself than with the collision of worlds it represents.
Consider first the trademarks of investing. Great investors are slow, deliberate and thoughtful. Their goal is to test your business model to the breaking point. When they see a pitch, their first move is to poke holes in it to try to uncover its fatal flaws. They aren’t entirely risk-averse, but the risks are carefully hedged.
Now contrast that with entrepreneurship, which by its very nature requires risk. Not foolish risk, mind you, but calculated and deliberate risk. Savvy entrepreneurs still do their due diligence and examine the pitfalls ahead, but they’re ready to take the leap when the chance of success is high.
To drive the wedge a bit deeper, entrepreneurship requires a strong sense of urgency. Startups fail all the time, and for many reasons. For 82% of small businesses, cash flow plays a major role. As many as 42% found that they simply didn't have a market for their products. And most who have launched startups have felt acute pressure to be first to market with a great idea.
In short, this means that hustle is the hallmark of the entrepreneur. But the acquisition entrepreneur must learn to strike a careful balance between hustle and caution.
Know What You Want
If you hope to gain your equilibrium and find success in acquisition entrepreneurship, it first comes down to knowing what you want.
Too many potential acquisition entrepreneurs get stuck in the investor mentality when they don't have a clear idea of what they're looking for. Without clarity about what will match their attitude, aptitude and action requirements, they miss prime opportunities even when they're biting the bait.
A retail wine shop, for example, might have a long list of established suppliers and customers, presenting a perfect opportunity for someone with skills in supply chain management and online marketing to step in and drive growth. But if you don't have a clear idea of what makes a good fit, you might only see what is, not what could be, with that wine shop.
When you know what you want, though, you will be prepared to quickly assess opportunity and risk, turn up the urgency level and move in on the right deal.
From Clarity to Focus
Equipped with clarity and urgency, you're ready to further fine-tune your focus in three important ways:
1. Understand that opportunity brings risk.
It's one of those pesky facts of business that risk and reward correlate. So if the acquisition is worth pursuing, it's probably a bit risky.
Sometimes, when the risks are clear, it's easy to choose your path. Oftentimes, though, the potential outcomes are hazy. If you've clearly envisioned what you want, you can better identify the growth opportunity and move forward.
When the opportunity looks right, your job is not to let that overly conservative investor side hold too much sway. When the time comes, you've got to embrace the risk.
2. Think like a CEO (even if you aren't one yet).
The seller isn't simply trying to unload a company. She wants someone who will take the business she built and run with it. You're not just a buyer; you're a CEO in need of a company.
When you think like a CEO, you realize that acquisition is merely the first task in growing your new business. Beyond that hurdle lie many more. Embracing this identity — a much easier task now that you know what you want — puts you in the right mindset to tackle those challenges when they come.
3. Set a time frame.
To keep your urgency level high, set a time frame for achieving your acquisition goal. It's easy to put off your search when you're squeezing it in part-time, but a lax approach will leave too many deals dead in the water.
With the right focus, anyone can go from starting a search to landing an acquisition in six months. And if you keep a firm goal in view, it will help you make that extra push to land that next meeting, move to the next phase with a seller, or start the next round of your search.
Acquisition entrepreneurship offers an exciting new angle for many entrepreneurs. With your focus and commitment sharpened in these ways, you'll ensure you're keeping the entrepreneurial spirit in your acquisition search. Then, you'll be set not simply to close the deal, but also to grow your new business.