Do You Have What it Takes to Become an Acquisition Entrepreneur?

January 2023

Do You Have What it Takes to Become an Acquisition Entrepreneur?

Do you dream of scaling a business to new heights? What if you could skip the lengthy and complex startup phase and generate profitable revenue from day one? Acquisition entrepreneurship could offer you just that!

This blog post will tell you everything you need to know about acquiring a startup, along with handy tips to make your next acquisition a success.

What is acquisition entrepreneurship?

Acquisition entrepreneurship is a buy-and-build strategy that often offers a faster and easier path to entrepreneurial success. It involves buying, running, and scaling an existing company as a means of becoming an entrepreneur.

Suggested reading: Acquisition vs. Ideation: Is Acquisition Entrepreneurship Your Best Bet?

Why should I acquire a startup?

Did you know that 20% of businesses fail in their first year and around 60% won’t make it to three years? The sad truth is that the majority of startups fail for various reasons including cash flow problems and lack of market demand.

This is why more entrepreneurs are shifting away from the conventional startup route in favour of acquisition entrepreneurship.

An easier path to entrepreneurial success

One of the biggest advantages of acquiring a business is that you will skip the time-consuming, complex, and risky startup phase. Instead, you’ll take control of an established company and have the opportunity to hit the ground running and start making a profit from day one!

Of course, acquiring a startup is not without risk but your chances of success are much higher when compared to starting a company from scratch.

Benefits of acquisitions include:

  • Fewer entry barriers
  • Higher market power
  • Established customer base
  • Higher growth potential
  • Access to valuable resources e.g. quality staff and capital

Suggested reading: The Acquisition Advantage

6 tips for acquiring a startup

If you’re ready to dive into the exciting world of entrepreneurial acquisition, here are some top tips to help you buy then build a profitable startup.

1. Reach out to other entrepreneurs for advice

Entrepreneurs who have been through the process can offer valuable guidance and support your acquisition journey. You can join a free platform like Foundy to connect with other entrepreneurs and industry experts.

2. Look for a company in a familiar industry

Acquiring a startup in a new industry is possible, but it can be extremely challenging and has higher risks involved. This is why it’s preferable to buy a company in an industry that you are familiar with.

3. Build an innovative company culture

As American entrepreneur Steve Bank once said: “Innovation in an existing company is not just the sum of great technology, key acquisitions, or smart people. Corporate innovation needs a culture that matches and supports it.” Focus on building a corporate culture that aligns with your vision and encourages innovation.

4. Assess business viability

The startup you acquire should ideally have been around for at least a couple of years. Check the viability of any company you’re interested in by carefully inspecting financial records and carrying out a thorough due diligence check.

TIP: You should also conduct research to measure public perception of the business such as using brand perception surveys and other tools.

5. Focus on startups with a loyal customer base

Acquiring a new customer can cost five times more than retaining an existing customer and increasing customer retention by 5% can boost profits by 25-95%. This is why it’s so important to acquire a startup with an established and loyal customer base.

TIP: The most valuable customers are those who keep engaging with the company, for instance, through a recurring subscription model.

6. Join an acquisition marketplace

Finding a suitable startup to acquire can be a difficult and drawn-out process. The good news is that you can leverage an acquisition marketplace like Foundy to make acquiring a startup quicker and easier. These platforms are also typically a lot cheaper than using a broker!

Find scalable, high-potential startups with Foundy!

If you want an easier and less risky route to successful entrepreneurship, join Foundy for free today. Our user-friendly marketplace will connect you with hundreds of sellers who are actively looking for an exit opportunity, saving you valuable time and effort.

Get in touch if you have any questions - we’re always happy to help!

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