Why Entrepreneurship by Acquisition is a Smart Business Move
Starting a new business from scratch can be an overwhelming process, with many entrepreneurs struggling to get their venture off the ground. But what if there was another way? What if you could acquire an existing business and take it in a new direction? This is the idea behind entrepreneurship by acquisition, a strategy that is becoming increasingly popular among savvy business owners.
Introduction
Entrepreneurship by acquisition involves purchasing an existing business with the aim of developing and growing it further. Rather than starting from scratch, entrepreneurs can benefit from an already established customer base, financial history, and operating systems. But why is this approach becoming a more viable option?
The Advantages of Entrepreneurship by Acquisition
Firstly, entrepreneurship by acquisition mitigates the risks associated with starting a new business. By acquiring a business with an established reputation, entrepreneurs have the assurance of a proven customer base, revenue streams, and accumulated experience. This ensures that getting up and running quickly and efficiently is a far more likely outcome.
Secondly, entrepreneurship by acquisition can provide greater value for money than starting a new business. This is particularly true when the cost of new entry into a market is incredibly high. For example, the startup costs for a brand new technology company can run into the millions of dollars. By acquiring an existing technology company, an entrepreneur can benefit from existing patents, intellectual property, and employee resources, all of which are highly valuable and often cost-prohibitive to obtain in a new venture.
Thirdly, an acquisition can provide valuable strategic advantages. As an example, a company specializing in software may decide to acquire a hardware manufacturer to expand into a new line of business. This provides a strategic advantage by offering a combined solution for the entire technology package, all under one roof, and with the added benefit of existing customer expectations and loyalty.
Lastly, entrepreneurship by acquisition provides an opportunity for entrepreneurs to engage with founders and owners who are passionate about their products or services, and are often willing to assist in the transition process. This can provide valuable insights into the business, and the processes involved in creating a successful venture.
Examples of Successful Entrepreneurship by Acquisition
Many successful entrepreneurs have adopted the approach of entrepreneurship by acquisition. Amazon, for example, acquired Whole Foods to expand its supply chain and to gain an amplified presence in the grocery sector. Similarly, Warren Buffet’s company, Berkshire Hathaway, acquired Duracell to gain access to a well-established brand and highly specific distribution networks. Other examples of successful entrepreneurship by acquisition include Microsoft’s acquisition of LinkedIn, Salesforce’s acquisition of Tableau, and Facebook’s acquisition of Instagram.
Conclusion
Entrepreneurship by acquisition offers entrepreneurs a viable strategy for launching a business that is exciting, engaging, and full of potential. By leveraging existing networks, customer bases, and technologies rather than starting from scratch, entrepreneurs can reduce the risk of their venture, while simultaneously increasing the potential for success. Reviewing the advantages and examples of successful entrepreneurship by acquisition, it is clear that this approach presents a smart business move and a worthwhile pursuit for those looking to develop and grow a successful venture.
