Adam Coffey, founding partner of CEO Advisory Guru, LLC, and best-selling author of The Private Equity Playbook, believes that every entrepreneur’s ultimate goal is to achieve freedom. While the methods vary, whether through building multiple businesses or launching a single product, the desire for freedom remains a common thread. However, the reality is that many businesses fail within the first year, and the odds of reaching a million dollars in revenue are slim.
Coffey suggests that one way entrepreneurs can increase their chances of success is by buying an existing business rather than starting one from scratch. With 58 acquisitions and billions in exits over his 21-year career, he has seen firsthand how buying an established business can reduce risk. By purchasing a business that has a proven track record of success, entrepreneurs can have confidence in its ability to attract customers, generate revenues, and be profitable.
To identify the right business to buy, Coffey recommends starting by listing out industries that align with your skills and passions. Focus on industries that serve needs rather than wants, operate with contracted revenue, and have low capital expenditures. By narrowing down industries based on these criteria, entrepreneurs can select sectors that are more likely to thrive in a volatile economy.
In order to further refine your search, Coffey advises leveraging research tools such as DealStats, Hoover, and Grata to verify industry viability and compile a list of potential acquisition targets. From there, it is essential to create a profile of your ideal company, considering factors such as whether you want to be an active CEO or a passive investor, geographic location, revenue size, and customer base. By defining these parameters, entrepreneurs can streamline their search and focus on businesses that align with their goals.
Buying an existing business can be a smart decision for entrepreneurs looking to reduce risk and increase their chances of success. By acquiring a business that has demonstrated revenue, customers, and earnings, entrepreneurs can leverage past performance as an indicator of future success. When coupled with thorough research and a clear understanding of your ideal company profile, buying an existing business can be a strategic step towards achieving the ultimate goal of freedom as an entrepreneur.
