Exploring the Benefits of Entrepreneurship Through Acquisition (ETA)
Introduction
The concept of entrepreneurship through acquisition (ETA) has gained immense popularity in recent years. It involves acquiring an existing business rather than starting from scratch. ETA offers numerous advantages, such as reduced risk, established customer base, and existing infrastructure. In this article, we will discuss the benefits of ETA and why it can be a smart move for entrepreneurs.
Reduced Risk
Starting a new business from scratch involves a high level of risk, as there is no guarantee of success. On the other hand, ETA significantly reduces the risk associated with starting a new business. The acquisition of an existing business includes established operations, an existing customer base, and revenue streams. The acquired business already has an established reputation, which can prove to be valuable in the long run.
Established Customer Base
One of the significant benefits of ETA is an already established customer base. When starting a new business, entrepreneurs often struggle in gaining customer trust and loyalty. In contrast, acquiring an existing business means the new owner can take advantage of the existing customer base to generate revenue and increase profitability. Moreover, the acquired business already has established relationships with suppliers, which can provide a strategic advantage to the new owner.
Existing Infrastructure
Acquiring an existing business additionally comes with an existing infrastructure setup. For instance, a new owner need not bother about setting up an office, buying or leasing equipment, or establishing distribution channels. The infrastructure helps the new owner to leverage the existing systems and reduce costs significantly. The cost benefits achieved through ETA can work to be in favor of profitability.
Case Studies
Several businesses have had immense success through ETA, and the case of Proctor & Gamble’s acquisition of Gillette is one such example. The acquired business helped P&G to explore new revenue streams and marked a significant milestone in their journey towards expanding their product portfolio while targetting a different consumer market.
Another example is the acquisition of Whole Foods by Amazon. With this acquisition, Amazon was able to enter the food retail market while taking advantage of Whole Foods’ established infrastructure.
Conclusion
Entrepreneurship through acquisition is a smart move for entrepreneurs, as it provides reduced risk, an established customer base, and existing infrastructure. Additionally, with the guidance of an experienced and supportive ETA team, the process can be made easier. The case of P&G and Amazon proves that ETA is a viable option for businesses that want to grow and expand their product portfolio. Therefore, existing business owners can explore the option of selling their business while helping new entrepreneurs achieve success through ETA.
