Interest in entrepreneurship is at an all-time high. Data shows Gen X-ers’ share of 46% of all small businesses is set to grow over the next decade, while 93% of all Gen Zers have taken steps toward business ownership, indicating that entrepreneurship is set to explode once again.
With traditional approaches to entrepreneurship now falling short, a change of paradigm is essential. This is where the relatively recent concept of Entrepreneurship Through Acquisition (ETA) comes into play, especially among mid-career professionals as they stand to benefit the most from current demographic trends.
The idea of acquiring a business instead of building one from the ground up is nothing new by itself. What makes ETA different, however, is the strategy surrounding the acquisition. From finding the right opportunities and securing funding to optimizing growth post-purchase, this emerging trend has changed entrepreneurship in more than one way. Here are three reasons why every aspiring entrepreneur should consider it.
Acquiring Businesses Is Easier Than Ever
When learning about ETA, one of the first concerns that come to the mind of aspiring entrepreneurs is the upfront costs. This is the result of the assertion that acquiring a profitable business is certainly more expensive than bootstrapping one, at least in most cases. While logical, this concern is not really reflective of the changing reality as ETA is becoming easier to achieve by the day.
Investment firms like HalBar Partners have focused their efforts on helping aspiring entrepreneurs find a suitable business and acquire it. Not only does the firm remove financial barriers by financing deals upfront but it also provides strategic support along the way. This support comes from experts like co-founder Nate Wasson, who has a background in family offices, portfolio construction, and entrepreneurship.
You Can Focus on Innovation from the Get-Go
More often than not, entrepreneurs find themselves spending most of their energy trying to keep the lights on in the early stages of running a business. Some estimates put the time it takes between three and five years for a startup to become profitable, which can be an eternity when you are competing to make it in a competitive space. Let’s not even talk about the toll this takes on innovation.
With ETA, entrepreneurs, or “searchers” in a search fund, can reverse the equation by ensuring that reaching profitability is no longer a concern. As all of the business infrastructure is in place, entrepreneurs can focus their efforts on innovating both inside and outside the business, whether this is in terms of new offerings, improving processes, or expanding the brand.
There are Plenty of Options to Choose From
Demographic shifts have long been one of the main drivers for the transfer of private businesses. With the entirety of the boomer generation reaching retirement age by 2030, the “silver tsunami” is expected to result in over $10 trillion worth of business assets changing hands. This makes the coming years a unique opportunity to acquire profitable businesses and bring them to the 21st century.
When considering that the businesses owned by millions of these new retirees would have been around for decades, their intrinsic value is enormous. In addition to the profitability they are likely to offer, they already have been woven into the fabric of their respective communities. This offers not only the brand recognition that comes with a long history but also a time-tested infrastructure, a loyal customer base, and an experienced team.
The world of entrepreneurship has long been dominated by the narrative that to succeed, one must either disrupt entire industries or raise millions of dollars in venture capital. ETA is shifting this paradigm and demonstrating that entrepreneurship on a smaller scale not only can be much more sustainable and attainable but also more impactful. With the foundations already in place, it is up to the new generation of entrepreneurs to build on them.