Adam Coffey, founding partner of CEO Advisory Guru, LLC and best-selling author of The Private Equity Playbook, believes that many entrepreneurs dream of achieving freedom through their businesses. However, the reality is that many businesses fail within the first year, and even those that survive often struggle to make significant revenue. Coffey suggests that one key way for entrepreneurs to increase their chances of success is to buy an existing business rather than starting one from scratch. With 58 acquisitions and billions in exits over his 21-year career, Coffey has seen the benefits of this approach firsthand.
Before diving into the process of acquiring a business, Coffey recommends taking some time to identify industries that align with both your skills and passions. He advises focusing on industries that serve needs rather than wants, operate with contracted revenue, and have low capital expenditures. By choosing an industry that meets these criteria, entrepreneurs can increase their chances of success in a volatile economy. Once a suitable industry is identified, potential buyers should conduct thorough research to verify their choice and develop a list of potential acquisition targets.
To further narrow down the list of potential businesses, Coffey suggests creating a profile of your ideal company. Factors to consider include whether you want to be an active CEO or a passive owner, the age of the current CEO, your long-term goals for the business, geographic location, revenue size, and target customer base. By defining these criteria, entrepreneurs can create a detailed profile of the type of business they are looking to acquire and narrow down their list of potential targets. This targeted approach increases the likelihood of finding a business that aligns with their vision of freedom.
When approaching the process of buying an existing business, entrepreneurs should consider the reduced risk compared to starting a business from scratch. By acquiring a business that already has revenue, customers, and earnings, buyers are investing in something that has already proven its viability. While past performance is not a guarantee of future success, thorough research and a careful selection process can help stack the odds of success in the buyer’s favor. Ultimately, the goal of buying an existing business is to create a path to financial freedom and independence as an entrepreneur.
Forbes Business Council is the leading organization for business owners and leaders looking to connect and grow their businesses. Adam Coffey’s insights into the benefits of acquiring existing businesses offer valuable guidance for entrepreneurs looking to achieve success and build a life of freedom through strategic business acquisitions. With a focus on aligning skills, passions, and industry trends, entrepreneurs can increase their chances of success and create a path to financial independence.
