Which Kind of Business Would I Buy Today?
Business acquisition activity has been breaking records over the past few years, leaving many serious acquisition entrepreneurs wondering: what business should I buy?
We are in an interesting time. There are massive shifts going on in terms of our demographics, consumer preferences, and how goods are moved and produced around the globe.
Growing Shifts in the Market
First, there is the slow retirement of the largest demographic sector of our economy: the baby boomers. This will see a major change in their buying habits and, for this reason, the kinds of businesses that will be sought after for the next fifty years.
Online shopping and e-Commerce have never been more important as a component of a business. The pandemic accelerated the depth of this shift, but the movement was already there. Now a business like Amazon, which essentially amounts to a warehousing and distribution business, has modernized its sector.
The big disruption that came about due to the pandemic was the decreased faith and increased challenges with the global supply chain. The ability to move goods from a production center in one part of the world to consumers in another has been an established and expected norm.
But the pandemic has made it clear that regional turmoil in different parts of the world can make the supply chain unreliable.
On top of these new events, which are sure to affect market trends, there are also the mainstays. Necessities like food, clothing, hygiene, housing, infrastructure, health care, and so on will always be marketable. For many, necessities have greatly expanded to include ostensibly luxury items, such as personal computers and personal technology, automobiles, and entertainment.
So, when it comes to considering what kind of business to buy, where should you start?
What are You Trying to Achieve?
We would begin with a shift in perspective. Instead of thinking about what different business sectors might do for you (in terms of profits), consider what you might be able to offer in various businesses instead.
Consider the opportunity profile of the business, and ask yourself what you are trying to achieve. Some acquisition entrepreneurs are looking for a safe bet with steady returns and possibly a smaller profit margin after the sale. This is a common route for new acquisition entrepreneurs. There is nothing wrong with this approach, provided they are aware that this is their comfort level.
Becoming CEO of a business overnight is a massive undertaking. Any acquisition entrepreneur will be doing themselves a massive favor if they understand their capacity and work within that sphere.
What are the Leveraging Points?
The second most important consideration is what you can bring to the business. What areas of the business need work? Does this align with your abilities to do that work?
For instance, is this business in desperate need of new talent? If so, do you have great management skills and a strong sense of recruiting and retention that you can bring to the business?
Another consideration that many find helpful is to seek out a business with one foot in the old economy and one foot in the new economy.
This is where the business is sound in concept, and that concept is going to keep deriving value in the future. But perhaps the technology is outdated, keeping the business from realizing its true profitability.
Looking at demographic trends for the business is also important. Is this a small, regional, or national business, and how are the demographics (age, occupation, interests) going to evolve in the coming years?
Using baby boomers, looking at products and services for retirement age folks is a good idea, but not if it is a local business in an area with a predominantly younger population.
Industries Where M&A is Heating Up
Some predictions of small business types are agreed upon across the board as successful types and areas of business for the coming decades. These include:
- Auto services
- Electronics Repair
- IT support
- Home Health Care (including maternal and elderly supports)
- Wellness (including personal training, products, and coaching)
- Children (education and entertainment)
- Sharing Economies (cars, tools, and so forth)
This list is not exhaustive since it is important to consider your capacity and assets first. Still, it can serve as an entry glimpse into the services that are evergreen and those that are trending.
3 Steps to Get the Ball Rolling
When you are ready to commit to becoming an acquisition entrepreneur, here are three steps to get started:
- Find the perfect idea for you: The very first consideration is what you can bring to the table. Create a list of assets that outlines your career capital and the kind of experience you bring to the table. Consider the business areas and types that would benefit from these skills.
- Get organized and make it official: Becoming an acquisition entrepreneur is a big decision and involves no small amount of risk. Make sure your finances are in order, and your personal life can take on the weight. Talk it over with your family and inform the people in your life who care about you, so they know you may need some extra support at times.
- Locate your funding source(s): Consider how you will conduct your search. Can you do a full-time or part-time search? Will you be looking into an SBA? There are four pathways to acquisition entrepreneurship, namely no money down, the search fund model, independent sponsorship, and self-funded. Knowing your route at the outset will greatly inform your search.
Watch Walker’s vlog here as he answers “What Business Would I Buy Right Now”: https://youtu.be/kNMKdZ9YFZA
If you are serious about buying a business in the next six to twelve months, consider attending the Acquisition Lab for by-side advice and support. We are here to walk you through the process of purchasing your first business with support from industry experts and experienced entrepreneurs. Don’t hesitate to reach out today.