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Entrepreneurship Through Acquisition (ETA) is quickly becoming a household term among aspiring entrepreneurs who do not desire to start a business but would rather purchase an existing business (not a franchise) from someone looking to transition out of their business. I was attracted to this option because you already have revenue, customers, employees and a system to grow the business post-acquisition.
In 2019, I purchased a business that managed and operated cemeteries. Pretty unique, right? This business brought in seven figures in revenue and served a market that would be here regardless of recessions or economic downturns. What I did not expect was COVID-19. The COVID-19 pandemic threw in numerous unforeseen obstacles that impacted our revenue growth, labor costs and overall growth strategy. We went from planning to double the business within 12 months to liquidating assets, removing myself from the payroll, taking on a second job and downsizing the business to survive.
Unfortunately, we struggled through the aftermath of the pandemic and eventually had to shut down operations in 2023. Despite my business failure, I learned ten key lessons applicable to entrepreneurs, franchise owners and small business owners.
Here are the ten lessons that failure taught me after purchasing my first business.
1. Explore non-traditional financing options
I used the customary options to finance my first acquisition: bank debt, seller financing and my own funds. Next time, I would spend more time exploring more creative and non-traditional financing options, which would limit the use of personal credit and cash out of pocket. Such options include a supplier loan, integrator equity, carveouts, deferred down payments, revenue-based factoring and earn-outs.
2. Maintain healthy relationships with business partners and stakeholders with clear boundaries
When I shifted my role from business manager to president of the company post-acquisition, I quickly noticed how my relationships with my team changed. There were times when it was difficult to converse with someone who is your consultant and your landlord. Next time, I will establish more clear boundaries and expectations with the working relationships I have with my team.
Related: You Have to Fail If You Want to Succeed
3. No day-to-day operations for me = find the right talent to mentor and grow in this role
When I led the cemetery business, I wore multiple hats myself: sales, marketing, finance, operations, HR and accounting. Because of the pandemic, I did not have enough resources to hire at least a Chief of Staff or Executive Assistant to help me divide up all the tasks. I also recognized that my strength focuses on sales, marketing and business development. My weakness is everything else, especially operations. Next time, I will find the right person to sit in the right seat to operate our business to free me up to do what I am more skilled, talented and passionate about doing to grow the business.
Related: Employers Are Complaining They Can’t Find Qualified Talent — Turns Out They Might Be the Problem.
4. Diversify
With this one business, I breathed, ate and slept all cemeteries-related things. While that is helpful initially, I can see the benefit of being more of a generalist who focuses on growing businesses. With the next business I acquire, I will focus more on considering what other businesses can complement the one I bought, either by partnering with them, owning equity in them, or buying them outright.
5. Be flexible with your timeframe
I ideally wanted to grow this cemetery business for the long term and retire. After this experience, I can be open to a timeframe of acquiring a business, scaling it and then selling it within three to five years and repeating the cycle. The key here is to have an open mind on what the best route to choose is and to be open to change while pursuing it.
6. Make sure to take care of yourself and your family also
When our business struggled, I struggled with it, too, and took myself off of payroll numerous times to ensure that my employees and their families were taken care of first. In retrospect, I should have done a better job of managing the business where my family and employees’ families were cared for even during tough times. If that meant downsizing a project or changing priorities, I must recognize that the purpose of a business is to support the needs (and wants) of your customers, your employees and your shareholders, which includes me.
7. Success is not dependent on me — it is all about the team
Coming from corporate America as an individual contributor, I was very dependent on myself to make things happen. However, when my business was feeling the pressure of grow-or-die, I messed up by thinking that if you want something done right, you do it yourself. That is a bad idea and not sustainable either. Many times, I burned myself out, trying to do everything to keep the business alive. I should have asked for help earlier and recruited people to work within their strengths to cover my weaknesses so that we could save the company together.
Related: 6 Steps to Build a Strong Team
8. Align your business’s success with the success of your team members
I learned that money is not always the primary motivator for all employees. Take the time to learn more about each employee’s particular professional, financial and personal goals. This is a great way to retain talent in a competitive environment because the employees see that you care beyond just the job getting done. They can also see how their job is connected to the company’s overall success, which benefits all, including the employees and their families.
9. Transition from individual to leader and advisor
I realized through this experience that I am much better as a leader, investor and advisor than a manager. In my next business, I want to find passionate and excellent managers so I can do more of what I am passionate about: growing people and businesses.
10. Be conservative with money
After buying my business, I expected certain prospective customers to work with us before the pandemic hit. I faithfully prepared by making investments in people, vehicles and equipment in anticipation. Next time, I should adopt a “trust and verify” approach and keep a more conservative, lean, and scrappy mindset. I would make the necessary investments after the contracts have been signed.
Related: 7 Crucial Money Tips to Failure-Proof Your New Business
This story originally appeared on Entrepreneur
