The following is adapted from Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game
For the purposes of this article, I’m going to assume that you are serious about purchasing a business and using your entrepreneurial skills to grow that business. You like the challenge of making something better and you understand that acquisition entrepreneurship is an ideal route to serving people, building a successful business, and growing your wealth.
Additionally, you understand that existing businesses have many advantages over startups. While the vast majority of startups fail, even those backed by venture capital (VC), existing businesses are already, by definition, at least moderately successful. For approximately the same level of investment as you might make in launching a startup, you can often purchase a functioning business. Once you’ve done this, you’re free to grow that business, increasing your revenues and satisfaction.
In short, acquisition entrepreneurship is an often-overlooked but potentially highly successful form of entrepreneurship. Before you go ahead and pull the trigger on a deal, however, you should ensure that you do due diligence. Part of that due diligence is on any business you’re thinking of purchasing, and part of that due diligence is on yourself.
What do I mean by this? Not every business is suited to every person, and not every person is suited to entrepreneurship. SWOT, a common business strategy practice, flushes out the strengths, weaknesses, opportunities, and threats of a particular business. Applying this common business strategy to yourself will fine-tune your self-understanding.
How to Conduct a Personal SWOT
SWOT stands for strengths, weaknesses, opportunities, and threats. The purpose of this exercise is to identify your personal SWOT profile and give you an insight into the types of business that will suit you and those that won’t.
First, make a list of all of your career accomplishments to date and what behaviors drove those results. Consider what challenges you have overcome. What have you committed yourself to and achieved exceptional results with?
What activities do you enjoy actually doing? Do you enjoy coordinating lots of people’s activities? Digging into metrics? Calling on big accounts? Solving problems? Those are all great, high-level descriptions, but what about the details? Do you enjoy talking on the phone or managing emails all day? Running daily production meetings? Keeping the accounting tight? Going on sales calls? Managing the depths of an online marketing campaign? Integrating new systems into an organization?
These are your strengths. The next step is to uncover your weaknesses? Just as important as knowing what you’re good at and what you enjoy is knowing what type of activities you should avoid. What areas, tasks, and even possible industries are off limits for you? What activities just absolutely do not interest you? What assignments do you drag your feet on? These should be identified so you can concentrate on working within your sweet spot and focus on what you do best. Get it all down on paper: the good, the bad, and the ugly.
Once you’ve examined where you thrive and what to avoid, it’s time to build your resume and identify the opportunities that appeal to you. Record your relevant work experience and what your role was in each position. Be sure to use action verbs to frame your accomplishments; quantify the specific results you achieved.
This helps to emphasize what really stands out in your career, where your interests lie, and where and how you get the best results. It also serves to identify what your role should be moving forward. Do you excel in marketing, sales, process implementation, or accounting? What areas are you comfortable growing into and which ones do you want to hire assistance for?
Finally, quantify the threats to your success. Where are you likely to make mistakes? What problems are you likely to misjudge or overlook? This exercise can be difficult to undertake alone, so consider involving trusted friends or even professionals.
As an example, one of the most dangerous mistakes an entrepreneur can make is assuming that just because they understand the technical work of the business they can successfully run a business that does the technical work. As Michael Gerber describes at length in his book The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It, staffing, marketing, and cash flow management have nothing to do with baking pies, but everything to do with running and growing a pie business.
Use Your SWOT as a Tool
Once you have completed your personal SWOT, you should have a solid understanding of what you enjoy doing and are good at, what you don’t enjoy doing and are bad at, the areas you can grow into a role and the areas in which you are better off hiring someone or avoiding investment.
Spend time reflecting on yourself before you make any big decisions. For the purpose of true self-discovery, ignore your passions and interests for a moment. Simply focus on the activities and functions you are well-equipped to execute. This is about getting in tune with what you’re good at and doing a deep dive into your skillset.
Done well, this exercise should drive your interest in opportunities that may not previously have appeared interesting, and perhaps warn you off opportunities that you would have been at risk of taking on unwisely. Use it to evaluate businesses you are thinking of purchasing and your own capabilities to make a success of those opportunities.
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For more advice on conducting a personal SWOT or the advantages of acquisition entrepreneurship, you can find Buy Then Build on Amazon.