24 yr old Interested in Acquisition Entrepreneurship

[Rmoody]

Hey everyone!
I’m excited to be a part of a group with likeminded individuals to learn and grow from. I have had a successful 4 year stint in sales and have learned, read, competed, and succeeded in many ways thus far. The income I’ve made has allowed me to consistently save up and I’m getting ready to start pursuing entrepreneurship. I’m not interested in starting something from scratch but very interested in acquisition entrepreneurship. I have a lot to learn and hopeful to meet some folks here who know the best places to start with acquisition entrepreneurship!

 

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[Bearcorp]

Welcome to the forum, any specific areas or niches you'll be looking to target?

 

[Rmoody]

Welcome to the forum, any specific areas or niches you'll be looking to target?

I think that’s the challenge with my lack of expertise. I don’t know exactly where to start because I don’t feel like an expert in any given industry quite yet. I’ve considered service based businesses though and I know that’s really broad but I’m thinking things like plumbing, electrical, HVAC, and those types of home service companies. I just don’t know where I can target and immediately add value.

 

[circleme]

Your plan of getting into entrepreneurship through Acquisition Entrepreneurship is awesome. It's my ultimative end goal as soon as my current projects generate enough cashflow/capital BUT...

I’m not interested in starting something from scratch but very interested in acquisition entrepreneurship.

I can relate to this a lot and I was thinking like you a year ago. I did read quite a bit about Acquisition Entrepreneurship and followed a lot of people who are already successful with it and there was one common statement or advice from all of them:

"Before you start buying a business without having prior business experience, it's recommended to start one from sratch yourself."

To me, that makes total sense and that's why I'm going the "build it first"-route. I'm starting small, the TAMs aren't that big and I know that the relative value isn't high at all, but that doesn't matter to me at this stage of my journey. I'm only looking for experience within a small niche. As soon as I'm getting good at serving small markets, I might step into bigger markets and learn something there. That means more potential and also more learnings. After that I think it is okay to consider Acquisition Entrepreneurship. I mean, how am I supposed to boost for example the conversion rate of SaaS product in the digital marketing area if I have 0 idea how to do conversion rate optimization? How to acquire customers? Which traffic channel to pick?

All of those "problems" above aren't that hard if you have solved them before. But if you never did something like this before, it doesn't seem reasonable to me to just buy something and start "doing". Doing what and how?!

 

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[Tau Ceti]

thinking things like plumbing, electrical, HVAC, and those types of home service companies. I just don’t know where I can target and immediately add value.

Acquiring businesses without knowing the industry they are in is a recipe for disaster.

You will have a bad time. Unless of course the business can generate enough profits for you to pay a manager and then have enough left over cash to pay back your initial investment + loans.

But if someone already has a business set up in such a way, then why would they sell it?

Maybe they are retiring, maybe they need cash for something or maybe there is a flaw in the business that is not apparent to someone(like you) who hasn't worked in this particular industry.

The point is you don't know what you don't know.

If your goal is to buy HVAC companies, then maybe getting hired by one and working for 1 for a year while you build up your knowledge is not a bad idea. It could help you find companies that are under-performing, buy them, and turn them around. Then you could scale them or sell them for a profit.

The problem now is that you don't know what is a good deal and what isn't. Without this knowledge you won't know if you are about to score a great deal or buy a lemon.

On top of that, you need to be careful to not invest too much capital in that first deal because if it doesn't work out you may lose the whole thing.

TL;DR: Be careful

 

[Strategery]

I think that’s the challenge with my lack of expertise. I don’t know exactly where to start because I don’t feel like an expert in any given industry quite yet. I’ve considered service based businesses though and I know that’s really broad but I’m thinking things like plumbing, electrical, HVAC, and those types of home service companies. I just don’t know where I can target and immediately add value.

You said you have been successful with sales, could this be the value you add to a purchased business? Just because you aren’t an expert in sales shouldn’t stop you from adding value, especially if you’re competent in the area that needs improved.

I also am interested in acquisition. I’ve been looking through listings with at first one, now two brokers. Working with a competent broker will expose you to better businesses than listings alone.

DM me if you want to talk, and welcome to the forum

 

[Rmoody]

Acquiring businesses without knowing the industry they are in is a recipe for disaster.

You will have a bad time. Unless of course the business can generate enough profits for you to pay a manager and then have enough left over cash to pay back your initial investment + loans.

But if someone already has a business set up in such a way, then why would they sell it?

Maybe they are retiring, maybe they need cash for something or maybe there is a flaw in the business that is not apparent to someone(like you) who hasn't worked in this particular industry.

The point is you don't know what you don't know.

If your goal is to buy HVAC companies, then maybe getting hired by one and working for 1 for a year while you build up your knowledge is not a bad idea. It could help you find companies that are under-performing, buy them, and turn them around. Then you could scale them or sell them for a profit.

The problem now is that you don't know what is a good deal and what isn't. Without this knowledge you won't know if you are about to score a great deal or buy a lemon.

On top of that, you need to be careful to not invest too much capital in that first deal because if it doesn't work out you may lose the whole thing.

TL;DR: Be careful

I agree with you and have thought quite a bit about choosing an industry to go and work in, gain experience, and then jump into acquisition that way. That is actually a really great idea.

I do think there are some motivated sellers out there who have businesses that are successful and they have a lot of the right components in place and with a little expertise could be turned over to a good operator. I just need to do some more digging and research. Everything I’ve done is very high level. thanks again for your advice!

 

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[Rmoody]

Your plan of getting into entrepreneurship through Acquisition Entrepreneurship is awesome. It's my ultimative end goal as soon as my current projects generate enough cashflow/capital BUT...

I can relate to this a lot and I was thinking like you a year ago. I did read quite a bit about Acquisition Entrepreneurship and followed a lot of people who are already successful with it and there was one common statement or advice from all of them:

"Before you start buying a business without having prior business experience, it's recommended to start one from sratch yourself."

To me, that makes total sense and that's why I'm going the "build it first"-route. I'm starting small, the TAMs aren't that big and I know that the relative value isn't high at all, but that doesn't matter to me at this stage of my journey. I'm only looking for experience within a small niche. As soon as I'm getting good at serving small markets, I might step into bigger markets and learn something there. That means more potential and also more learnings. After that I think it is okay to consider Acquisition Entrepreneurship. I mean, how am I supposed to boost for example the conversion rate of SaaS product in the digital marketing area if I have 0 idea how to do conversion rate optimization? How to acquire customers? Which traffic channel to pick?

All of those "problems" above aren't that hard if you have solved them before. But if you never did something like this before, it doesn't seem reasonable to me to just buy something and start "doing". Doing what and how?!

Yeah I think these are all great points, especially starting small. I’ve definitely entertained the idea of learning a digital skill and taking that skill to start a small business and run with it. I could use my sales skills to acquire clients. I would just say that acquisition entrepreneurship peaks my interest quite a bit more than starting something from scratch. I just need to become much much more educated before I hop into acquisitions.

 

[Rmoody]

You said you have been successful with sales, could this be the value you add to a purchased business? Just because you aren’t an expert in sales shouldn’t stop you from adding value, especially if you’re competent in the area that needs improved.

I also am interested in acquisition. I’ve been looking through listings with at first one, now two brokers. Working with a competent broker will expose you to better businesses than listings alone.

DM me if you want to talk, and welcome to the forum

Yes that’s a great point you bring up. I have thought about how I could definitely bring my sales background to benefit the business and I really think that would be main area of how I could help the business grow is building out and/or improving sales processes, hiring sales reps, recruiting, etc. all things I’ve done before and could add value. Just tough because sales is a part of every business so understanding what specific industry I would want to go into and bring that sales expertise to is roadblock of mine. That’s why I do want to dive into the education of it more and see if I’m just psyching myself out or if my concerns are legitimate.

congratulations on your search! I have listened to some podcasts recently about working with brokers. The one thing I found interesting was that many brokers work for the seller and the buyer which I thought made it all the more important to find a trustworthy broker. How did you come in contact with your broker?

 

[circleme]

Yeah I think these are all great points, especially starting small. I’ve definitely entertained the idea of learning a digital skill and taking that skill to start a small business and run with it. I could use my sales skills to acquire clients. I would just say that acquisition entrepreneurship peaks my interest quite a bit more than starting something from scratch. I just need to become much much more educated before I hop into acquisitions.

Everyone would prefer the acqusition route I would argue, as it is "easier" than starting from scratch. But learnings through trial and error from starting your own business first beats more "education" without any practical experience gain everyday, imho.

 

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