Entrepreneurship Through Acquisition (ETA) has gained significant traction in recent years as a compelling path to business ownership. For those with an entrepreneurial spirit and not willing to bootstrap a startup, ETA offers an exciting alternative: buy an existing business and grow it. If you're considering this route, you're in the right place. This comprehensive guide will walk you through the key steps to start your ETA journey.

Understanding ETA: The First Step

Before diving in, it's crucial to understand what ETA entails. Unlike starting a business from scratch, ETA involves acquiring an existing business, typically one that's already profitable but has room for growth. This approach allows you to skip the risky startup phase and immediately step into an operational business.

However, ETA isn't without its challenges. It requires a unique skill set, combining elements of entrepreneurship, finance, and management. That's why our first actionable step is all about education.

1. Education and Skill Development

Your ETA journey begins with learning. Start by immersing yourself in ETA literature. Perhaps start with my previous blog post - "88 Hidden Gems: The Ultimate Reading List to Dominate Small Business Acquisitions," for a comprehensive list of resources.  If you are looking for specific first book to start reading I'd highly recommend the classic - "HBR Guide to Buying a Small Business," by Richard S. Ruback and Royce Yudkoff. Complement your reading with online courses on business valuation and mergers and acquisitions (M&A). Masterclasses, bootcamps, and platforms like Coursera and edX offer relevant courses from top universities.

Don't stop at theory, though. Attend ETA workshops and webinars to gain practical insights and connect with others in the field. These events often feature successful ETA entrepreneurs sharing their experiences.

Finally, sharpen your financial modeling skills. You'll need to analyze businesses' financial statements and create projections. If your Excel skills are rusty, now's the time to polish them up.

2. Define Your Acquisition Criteria

With a solid foundation of knowledge, it's time to define what you're looking for. This step is crucial as it will guide your entire search process. Consider the following:

• Industries: Which sectors interest you? Where do you have experience or expertise?

• Geography: Are you willing to relocate, or do you prefer businesses in your area?

• Business size: What's your target in terms of revenue and employees?

• Financials: What's your minimum acceptable profitability?

Don't forget to list your non-negotiables. These could be anything from "must have a strong management team" to "no businesses with high seasonality."

Remember, your criteria may evolve as you learn more about the market and yourself. That's okay – flexibility is key in ETA.

3. Build Your Network

ETA is not a solo journey. Building a strong network can provide you with leads, advice, and support. Start by joining ETA-focused groups on LinkedIn. These groups often share valuable insights and job opportunities.

Attend industry conferences and networking events. These are great opportunities to meet business brokers, M&A advisors, and fellow ETA entrepreneurs. Don't be shy about reaching out to successful ETA entrepreneurs for mentorship. Many are happy to share their experiences and offer guidance.

4. Prepare Your Personal Brand

In ETA, you're not just buying a business – you're selling yourself as the right person to take it over. This is where your personal brand comes in. Start by creating a professional website that showcases your background, skills, and ETA goals.

Develop a compelling personal story. Why are you pursuing ETA? What unique value can you bring to a business? This narrative will be crucial in differentiating yourself from other potential buyers.

Create a clear investment thesis. This should outline the types of businesses you're looking for and how you plan to grow them. Finally, prepare marketing materials like a professional bio and a one-page summary of your background and goals.

5. Understand Financing Options

Unless you're independently wealthy, you'll likely need financing to acquire a business. Familiarize yourself with the various options:

• SBA loans: These government-backed loans are a popular choice for ETA, offering favorable terms for business acquisitions.

• Seller financing: Some business owners are willing to finance part of the purchase price, which can be a win-win situation.

• Investors: Both accredited and non-accredited investors willing to invest anywhere from ~$100,000 to ~$150,000 in your target business for an equity stake in the business.

• Private equity and search funds: These can provide the capital you need, but often come with expectations of higher returns.

• Friends and family funding: While potentially easier to obtain, this option can strain personal relationships if things go south.

Understanding these options will help you determine your budget and target the right size of businesses.

6. Develop Your Search Strategy

With your criteria defined and financing options understood, it's time to plan your search. First, decide between a self-funded search or an investor-backed search. The former gives you more freedom but may limit the size of businesses you can target. The latter can provide more resources but comes with investor expectations.

Create a timeline for your search. ETA searches can take anywhere from 6 months to 2 years or more. Having a timeline helps you stay motivated and track progress.

Set up a deal flow tracking system. This could be as simple as a spreadsheet or as sophisticated as a CRM system. You'll want to keep track of every lead, where it came from, and its current status.

Finally, determine whether you want to conduct a broad search across multiple industries or focus on a specific niche. Both approaches have pros and cons, so choose the one that aligns best with your goals and expertise.

7. Start Your Search

Now comes the exciting part – actually looking for businesses to buy! Set up alerts on online marketplaces like BizBuySell and MergerNetwork. These platforms list thousands of businesses for sale.

Implement direct outreach campaigns. This involves contacting business owners directly to gauge their interest in selling. It's a numbers game, so be prepared for many "nos" before you find a "yes."

Engage with business brokers. They can be a valuable source of deals, especially for larger businesses. Attend industry-specific trade shows as well. These are great places to network and potentially find off-market opportunities.

8. Learn the Due Diligence Process

As you start finding potential deals, you need to be prepared to evaluate them thoroughly. This is where due diligence comes in. Study financial due diligence techniques, focusing on how to analyze financial statements and identify red flags.

Understand legal and operational due diligence as well. You'll need to review contracts, assess operational efficiency, and evaluate the management team.

Prepare a comprehensive due diligence checklist. This will ensure you don't miss any critical aspects when evaluating a business. Practice your due diligence skills on sample deals or case studies before applying them to real opportunities.

9. Assemble Your Team

ETA is not a solo sport. You'll need a team of professionals to help you navigate the acquisition process. Start by identifying a business attorney experienced in M&A. They'll be crucial in negotiating and structuring the deal.

Connect with an accountant who has M&A experience. They can help with financial due diligence and tax planning. Depending on the industry you're targeting, you may also want to research industry-specific consultants who can provide specialized insights.

Consider partnering with an experienced operator, especially if you're targeting an industry where you lack experience. Their knowledge can be invaluable in both evaluating and running the business post-acquisition.

10. Prepare for Ownership

While finding and acquiring a business is challenging, successfully running it post-acquisition is where the real work begins. Start preparing now by developing a template for your first 100 days of ownership. This plan should outline your immediate priorities and how you'll approach learning the business.

Study change management techniques. As a new owner, you'll likely want to implement changes, and knowing how to do this effectively is crucial.

Enhance your leadership and communication skills. You'll be stepping into a leadership role, potentially managing people for the first time. The better prepared you are, the smoother the transition will be.

Finally, make sure you understand the basics of various business functions like marketing, operations, and finance. While you don't need to be an expert in everything, a broad understanding will help you manage the business effectively.

11. Create a Self-Care Plan

The ETA journey can be long and stressful. It's important to take care of yourself along the way. Set realistic expectations for the journey. Understand that setbacks and frustrations are normal and don't reflect on your abilities.

Develop stress-management techniques. This could be exercise, meditation, or any activity that helps you unwind. Plan for work-life balance during the search. It's easy to become consumed by the process, but maintaining other aspects of your life is crucial for long-term success.

Build a support system. This could include family, friends, mentors, or fellow ETA seekers. Having people to lean on during tough times can make all the difference.

12. Track and Iterate

Finally, remember that your ETA journey is a learning process. Keep a journal of your experiences and lessons learned. Regularly review and adjust your criteria and approach based on what you're seeing in the market.

Seek feedback from mentors and peers. They may spot opportunities or pitfalls that you're missing. Stay updated on market trends and economic conditions, as these can significantly impact your search and eventual acquisition.

Conclusion

Embarking on an ETA journey is a bold move that can lead to incredible personal and professional growth. While the path may seem daunting, remember that many have successfully traveled it before you. With proper preparation, persistence, and a willingness to learn and adapt, you too can join their ranks.

Remember, the goal isn't just to buy a business, but to find the right business – one where your skills and vision can truly add value. So take your time, trust the process, and stay committed to your goal. Your future business is out there waiting for you to find it.

Good luck on your ETA journey!