Creating wealth through acquisition
What’s the main reason why people invest their money into new ventures?
Unquestionably, the rationale behind investing is to make more money, create a diverse portfolio and strive for wealth. Many financially savvy individuals invest in real estate, stocks and, even, high-profit products with the hope that they can one day sell and access a great return.
Forward-thinking entrepreneurs realize that business acquisition is the alternative path and advantageous way to gain access to capital, build personal equity and improve overall wealth.
But, what is overall wealth? And, what does it mean to build wealth?
Through acquiring a pre-existing small to mid-sized business, entrepreneurs improve their overall wealth by building financial, professional and personal prosperity.
Nourishing Professional and Personal Wealth
The process of buying a business is tedious. Business acquisition is rarely a route that someone makes the quick decision to follow. It’s a challenge that requires dedicated time, careful planning and preserved motivation.
Yet, the necessary elbow grease required doesn’t mean that a healthy business acquisition is without great material and emotional reward.
Through acquiring a business, entrepreneurs gain a fresh outlook on life, a new way of living and an adapted method for working to generate income. For many, the transition into business ownership is the ultimate work and lifestyle aspiration.
The ways that business acquisition can nourish, improve or alter your lifestyle are manifold, but here are a handful of examples.
By pursuing an acquisition you:
- Find a reason to transition out of a corporate 9 to 5 position, office or work setting.
- Put your professional drive and energy into an asset/company you own as opposed to someone else's.
- Decide your career path and position (eg. becoming your own boss, managing a team of employees or acting as a CEO).
- Gain the ability to adapt your workflow and commitments, leaving room for a balance between work and life (eg. prioritize family life, vacations and the activities that fulfill you).
- Develop the professional skills that you want to improve or gain—not the skills that your corporate job description requires you to have.
- Change your working conditions to suit your emotional wellbeing and needs as an individual.
- Build a work environment that reflects your values as a professional and individual.
- Create a community and workplace environment that makes sense to you (eg. building a strong company culture, working with like-minded people and motivated employees who help build your business).
Acquiring a profitable pre-existing business equates to much more than taking on a business name and operating license. Some of the ways that entrepreneurs create material wealth through acquisition are as follows:
- Acquiring pre-existing cash flow
Financially healthy businesses make profits. When you purchase a business with an established, reputable service/product and dedicated customer base, cash intake is immediate. For new owners, the promise of instant cash allows for innovation and the advancement of revenue. As a pre-existing business builds wealth, new owners can, in return, pay themselves a growing salary.
- Gaining physical and invaluable assets
Like people do, businesses often own physical and intellectual property. Purchasers of businesses typically acquire assets, meaning they might obtain ownership of valuable property such as real estate in the form of store locations, commercial office units, factory spaces and so on. Further, many business acquirers also obtain invaluable assets—non-material items like brands and operational systems—that have taken numerous years to develop and significantly contribute to the worth of their businesses. For example, a successful online retail business is likely to own a specialized e-commerce website that drives sales through an optimized domain, strategic copywriting and high consumer click-rates.
- Getting a return on invested capital
The benefit of owning assets is the potential for return on invested capital. Once a buyer successfully scales their acquired business to new levels of innovation, reach and profit, the overall value of their business increases. Therefore, when the time to sell your acquired business arrives, you’ll sell your business at a multiple and will gain a return larger than your initial investment.
Acquire a Scalable Business to Increase Financial Wealth
For a business to advance with a new owner, it has to have the potential to grow. The best way to build financial wealth through business acquisition is to purchase a business that is scalable. According to Sandra Hinshelwood from Business Partner Magazine:
"Scalability in business refers to the extent to which a business can grow and adapt to changes over time. This means that resources, operations and the overall business model must be prepared for changes in the scale of business operation"
An entrepreneur’s target business should ideally be equipped to foster innovation and change. If a business is stagnant operationally and strategically, then its performance is likely stagnant too.
Here are some examples of how a business owner might scale the strategy, operation and finances of their business to drive wealth:
- By pivoting products and marketing to adapt and service new markets and market trends.
- Through crafting additional, or reconfiguring, quality products and services.
- By strategizing methods to turn new and returning customers into life-long customers.
- By branching out to new geographies both physically and through marketing, online presence and so on to bring in new customers.
- Through acquiring additional businesses to build assets and amalgamate resources.
- Through acquiring additional businesses to eliminate competition.
- Through acquiring additional businesses, or altering operational strategy, to become a product supplier rather than just a product provider (i.e creating and manufacturing branded products that are in turn sold by other companies).
Here at Village Wellth, we see affluence and fortune holistically. We believe that there is a distinction, but connection, between an individual’s concrete wealth–their monetary and material prosperity— and—intangible wellth—their professional and emotional well-being and fulfillment in life.
Village Wellth provides first-time buyers with the resources, information and education you need to decipher how business acquisition can benefit you, so you can pursue your entrepreneurial journey—all while grasping wealth both materially, emotionally and professionally.