Entrepreneurship Through Acquisition: A Path to Becoming Your Own Boss
Aspiring entrepreneurs are turning to entrepreneurship through acquisition (ETA) as a viable alternative to traditional careers.
With thousands of baby boomers retiring each day, many small businesses are looking for new owners. Entrepreneurship through acquisition (ETA) offers individuals the opportunity to purchase and operate an existing small business, becoming their own boss in the process. This article explores the concept of ETA, who should pursue it, the types of businesses that fit ETA, financing options, and how to conduct a business search.
ETA: An Alternative Career Path
Understanding the concept of entrepreneurship through acquisition.
ETA, or entrepreneurship through acquisition, involves purchasing an existing small business and operating it as an alternative to a traditional career. Individuals who choose ETA become their own bosses and rely on the success of the business to achieve their career objectives.
Who Should Pursue ETA?
The qualities and skills required for a successful ETA career.
ETA is suited for individuals with basic management and business skills, an appetite for moderate risk, the ability to secure funding, and the capability to quickly learn different business models. While traditional careers offer stability and lower risk, ETA appeals to those who prefer flexible work hours, decision-making autonomy, and the opportunity for risk and reward.
Businesses Suited for ETA
Identifying the types of businesses that are well-suited for ETA.
ETA is best suited for businesses that generate predictable cash flows and exhibit moderate growth. These include car washes, property management companies, professional service businesses, commercial window-washing businesses, and medical clinics. ETA businesses should have enough cash flow to pay the owner a salary and reinvest in expansion opportunities. Unlike startups, ETA businesses should generate cash flow from day one and not require constant external capital to sustain or moderately expand.
Buying a Small Business
Overcoming financial barriers through creative financing options.
Financing the purchase of a small business can be challenging, but there are various options available. Creative financing options include seller financing, private investors, and loans from the Small Business Administration (SBA). Each deal comes with its unique terms and conditions, and sellers may be open to accommodating unique financing arrangements to ensure the business continues to grow under the right buyer.
Conducting a Business Search
Strategies for conducting an effective business search.
Experts recommend dedicating two years full-time to conducting a comprehensive business search across different markets. However, many ETA seekers engage in a more natural search, often involving family-owned businesses transitioning to key employees or related parties. Building relationships with business owners takes time, so it’s never too early to start planning for a future sale.
Conclusion: ETA provides a unique opportunity for individuals to become their own bosses by purchasing and operating an existing small business. With the retirement of baby boomers, there is a growing pool of businesses ready for new owners. By understanding the concept of ETA, identifying suitable businesses, exploring financing options, and conducting a thorough business search, aspiring entrepreneurs can embark on a rewarding career path that offers flexibility, autonomy, and the potential for growth and success.