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Entrepreneurship by Acquisition (ETA) is an aspiring entrepreneur who does not want to start a business, but wants to purchase an existing business (rather than a franchise) from someone who is considering exiting the business. is rapidly becoming a common term among I was attracted to this option because it already has revenue, customers, employees, and systems in place to grow the business post-acquisition.
In 2019, we acquired a company that manages and operates a cemetery. Pretty unique, right? This business brought him seven-figure revenues and contributed to a market that would exist regardless of recession or recession. What was unexpected was the new coronavirus infection (COVID-19). The COVID-19 pandemic has created a number of unforeseen obstacles that have impacted our revenue growth, labor costs and overall growth strategy. We went from planning to double our business within 12 months to liquidating assets, taking people off payroll, taking on side hustles, and downsizing our business to survive.
Unfortunately, our company struggled in the aftermath of the pandemic and was ultimately forced to cease operations in 2023. Despite my business failures, I learned 10 important lessons that apply to entrepreneurs, franchise owners, and small business owners.
Here are 10 lessons that failure taught me after buying my first business.
1. Consider non-traditional financing options
I used the usual options to finance my first acquisition: bank debt, seller financing, and my own funds. Next time, I plan to spend more time exploring more creative, non-traditional financing options that limit the use of personal credit and out-of-pocket cash. Such options include supplier loans, integrator equity, carve-outs, deferred down payments, revenue-based factoring, earn-outs, etc.
2. Maintain healthy relationships with business partners and stakeholders with clear boundaries
After the acquisition, when I moved from business manager to president, I quickly noticed how my relationship with my team had changed. There were times when it was difficult to have a conversation with someone who was both your consultant and your landlord. Next time, I would like to establish clearer boundaries and expectations for my working relationship with my team.
Related article: If you want to succeed, you need to fail
3. No routine = find the right person to mentor and grow in this role
When I led the cemetery business, I wore multiple hats including sales, marketing, finance, operations, human resources, and accounting. Because of the pandemic, we didn't have enough resources to hire at least a chief of staff or an executive assistant to share all the tasks. I also realized that my strengths lie in sales, marketing, and business development. My weakness is everything else, especially operations. Next time, I will find the right people to sit in the right seats and run the business so that I can be free to do what I have more skills, talent, and passion to do to grow the business.
RELATED: Employers complain they can't find qualified people, and it turns out that may be the problem.
4. Diversification
In this one job, I breathed, ate, and slept all things cemetery related. It helps at first, but you'll see the benefits of becoming a generalist focused on growing your business. For my next acquisition, I will focus on looking at other businesses that can complement the one I'm buying, either by partnering with them, owning an equity stake, or acquiring them outright.
5. Be flexible with your time period
Ideally, I wanted to grow this cemetery business over the long term before retiring. After this experience, I was able to accept a period of time where I would buy a business, scale it, then sell it within 3-5 years and repeat the cycle. The key here is to be open-minded about what path is best for you and be open to change as you pursue it.
6. Take care of yourself and your family too.
When our business suffered, I suffered through it too and took myself off the payroll many times to put my employees and their families first. In retrospect, I think I should have run my business better, taking care of my family and the families of my employees, even during tough times. If that means scaling back projects or changing priorities, I must recognize that the purpose of business is to support the needs (and wants) of customers, employees, and shareholders, including myself. not.
7. Success doesn't depend on me – it all depends on the team
Coming from a large American company as an individual contributor, I was very dependent on myself to make things happen. But when my business was under pressure to grow or die, I failed by thinking that if I wanted something done right, I had to do it myself. That's a bad idea and not sustainable. I have burned out many times trying to do everything to keep my business afloat. I should have asked for help sooner, hired people who could use my strengths to cover my weaknesses, and work together to save the company.
Related: 6 steps to building a strong team
8. Align business success with team member success
I learned that money is not necessarily the primary motivator for all employees. Take the time to learn more about each employee's professional, financial, and personal goals. This is a great way to retain talent in a competitive environment because your employees know you care about more than just getting the job done. You can also see how your work is tied to the overall success of the company, which benefits everyone, including employees and their families.
9. Transition from individual to leader and advisor
Through this experience, I realized that I am a much better leader, investor, and advisor than a manager. For my next business, I'd like to find a good manager with passion and work more on what I'm passionate about: growing people and the business.
10. Be conservative when it comes to money.
After acquiring a business, and before the pandemic hit, we were hoping that certain prospects would work with us. With this in mind, we have faithfully prepared by investing in people, vehicles, and equipment. Next time, you should adopt a “trust and verify” approach and maintain a more conservative, lean, and rigorous mindset. We plan to make the necessary investments after signing the contract.
Related: 7 Important Money Tips to Avoid Failure with Your New Business
