Volker Hartzsch is a seasoned business leader who has launched several companies, including Sixth Society and Profit Business Systems Inc. This article will look at entrepreneurship and how, rather than building their own business from scratch, some entrepreneurs instead opt to buy an early-stage company, effectively buying their way into entrepreneurship.
Launching a start-up requires an inordinate amount of dedication, as well as a considerable investment of time, energy and collateral. Entrepreneurship through acquisition (ETA) is an increasingly popular alternative, presenting an oftentimes less risky path to business ownership by purchasing an existing business venture.
While it may not be as hyped as the start-up life, purchasing an already established, solvent business is still classed as entrepreneurship. It is just a different, and typically less risky, start to the entrepreneurial journey. Thanks to the exit of the baby boomer generation from the labour force, ETA is gaining momentum.
According to stats shared by Entrepreneur, in the United States today, 52% of businesses are owned by individuals aged 55 or older. Many baby boomer business owners are seeking to sell their companies as part of their retirement plans. As an exodus of baby boomers exits the labour force, this has created significant business acquisition opportunities, particularly for organisations lacking a solid succession plan.
Although it tends to be the unicorns and one-in-a-million ideas that grab the headlines, in reality, SMEs form the backbone of most economies. In the United States, SMEs are credited with generating 44% of the national GDP. By purchasing an already established business, entrepreneurs have a higher likelihood of commercial success, with the hard work and challenges associated with getting the business up and running having already been done for them.
Start-up life is filled with stress and worry, entailing long days with little sleep as the founder scours the market for potential investors and customers. In those early days, there is little reward for this seemingly endless hard toil, even when the business generates a small influx of capital to extend its runway a little longer. Indeed, according to a report by Entrepreneur, just 10% of start-ups go on to become commercially successful, with far fewer generating any real wealth for the founders.
ETA, on the other hand, presents a much smoother route, with the groundwork having already been laid by someone else, quite possibly someone from the baby boomer generation. Across the United States today, 2.34 million baby boomers operate small businesses, employing over 25 million workers across the country.
While people typically associate entrepreneurship with starting a business from scratch, ETA provides limitless opportunities for entrepreneurs to leverage their skills, interests and capabilities to grow and improve an existing early-stage business. Many successful business leaders began their entrepreneurial journey through ETA, enabling them to deliver groundbreaking products and services that make a difference in people’s lives, generate employment and fuel economic growth.