This article appeared in Forbes in May 2022.
“Business opportunities are like buses. There’s always another one coming.”
This quote has been famously attributed to Richard Branson. Ask any aspiring entrepreneur about their top priorities, and you’ll likely hear a checklist along the lines of: Raise the seed round, launch the product, build the team. Rarely will you hear a response that mentions anything about buying a business or inheriting one from a mentor. And yet, this represents one of the most opportunity-rich, effective and lucrative routes to launching one’s entrepreneurial career.
As a serial entrepreneur myself, I would argue that the entrepreneurial community and those aspiring to launch their own company should, at the very least, consider this seemingly unconventional path. Today, approximately 50% of U.S. small businesses are owned by people who are 55 or older, and many don’t possess a succession plan for their companies. This important demographic shift, a part of the larger trend known as the "Silver Tsunami," which I’ve written about previously, underscores an incredible opportunity for soon-to-be business owners.
Yet, an opportunity is only one of the benefits of this path. Buying a business often shortens the learning curve of building an enterprise for new entrepreneurs. They inherit a viable business model, products and services and awareness of the target customer, which they would otherwise need to establish.
To be clear, I lacked objectivity on this subject matter as I launched my entrepreneurial career following this path. Before starting and running a successful investment and management company, I got my start by buying a small surgical hospital from a colleague and mentor who owned it. He became terminally ill, and after discovering the news, he offered to sell it to me at a fair price. While I aspired to become an entrepreneur at the time, I lacked experience. I was a full-time hand surgeon who spent his days between the clinic and operating room, honing his practice.
Rather than strategizing at 40,000 feet, an activity often ascribed to entrepreneurship, my mental space inhabited the microscopic level of neurons, tendons and bones. But I bought the hospital and focused on improving its business. And that decision changed the trajectory of my life and career. Within several years, I was able to start a series of successful companies and improve the likelihood of their success. Buying a business afforded me a fertile playground to develop the characteristics needed for success as an entrepreneur. It proved an invaluable experience. This is a reason I continue to voice support for this overlooked entrepreneurial path, which I believe provides incredible opportunities to the generations aspiring to start their own businesses and control their destinies.
So, how can you get started down this career path?
Consider your current company.
Do you work for a small business owned by someone nearing retirement? Does the business fall within your area of expertise? Are you passionate about it? If you answer “yes” to these questions, then it might be worth mentioning to the business owner. Use your best judgment, however, and pick the appropriate time and context for this conversation.
Review your CV or resume.
In addition to your current experience, scan your resume to review your work history and look for opportunities that jump off the page. Again, ask yourself if the business falls within your expertise and if you can be passionate about it. If you answer in the affirmative, then circle it as an opportunity warranting further consideration.
Leverage your "trust" network.
A trust network is a collection of people you know and trust in a professional context, including mentors, current and past colleagues, classmates and other connections who are invested in your development and growth. Communicate your intentions with them and ask about any potential opportunities. You might be surprised by what you discover. At the very least, making your intentions known will help these individuals introduce you to future opportunities they might encounter.
Think about hiring a consultant.
Another important consideration is to hire a consultant specializing in mergers and acquisitions. These individuals or firms can recommend acquisition targets, as well as help with preparing a valuation, creating a term sheet and letter of intent, leading the negotiation and closing the transaction. To be clear, I engaged an expert who assisted me in these areas. My investment and management company continues to leverage the talent of M&A firms to acquire companies.
To be clear, I’m not making the case that buying a business is better than building one or that anyone possesses the traits to become an entrepreneur. I’m simply arguing that aspiring entrepreneurs could benefit from asking the fundamental question, “Should I build or buy my business?”
Neglecting this question ignores an avenue that, to piggyback off Branson’s quote, paves the way for many “buses.” I would argue that by embracing the question and considering it seriously and truthfully, we collectively increase the chances that we can sustain the health of U.S. small businesses. And as a result, we can create more good-paying jobs, provide more essential products and services and give more aspiring entrepreneurs a foundation from which to launch successful careers.
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