Entrepreneurs learn how to acquire and grow businesses at 1819

This event not only equipped attendees with the skills they need to buy and expand a business but also connected them directly with potential sellers.

UC collaborates with industry partners to boost small enterprise growth across Cincinnati and Ohio. “Entrepreneurs have a unique blend of leadership, negotiation and financial discipline … skills that we grow at UC,” notes Marianne Lewis, dean of the school’s Carl H. Lindner College of Business. The Entrepreneurship Through Acquisition Conference offered additional proof of UC’s commitment to the Cincinnati business community through the 1819 Innovation Hub.

Participants learned where to find funding sources and how to navigate legal processes. Evelyn Streeter, owner of a Cincinnati floral shop, headed to 1819 to “gain more insight and knowledge about [business] buying and selling, plus legal information … just a whole other side of entrepreneurship.”

Streeter said she is glad she came.

“As a small business owner,” she says, “I don’t always have the business acumen on this side of things … so this has been an overall exciting experience to learn something new outside of my craft.”

An additional plus: networking with people who could one day be interested in buying her shop when she’s ready to sell.

Entrepreneurship through acquisition is the process of buying an existing small business and transferring ownership. It has multiple benefits: savvy buyers get an established customer base, learn industry knowledge from the seller and can immediately earn access to steady cash flow.

Cincinnati is a prime position for those interested in acquiring a business

“Seventy percent of Cincinnati businesses are owned by people over the age of 60,” says Carlene Ostergaard, buyer and managing director of Sunesis Holdings. “Cincinnati is ripe for entrepreneurship through acquisition.”

Although entrepreneurship through acquisition typically boasts higher success rates than founding a startup, it still comes with risks. The ETA conference, hosted by UC’s Center for Entrepreneurship and Cincy ETA, helped mitigate those challenges by connecting interested buyers with sellers and offering practical guidance on streamlining what could otherwise be a complex business transition.

Entrepreneurship through acquisition isn’t something to jump into lightly; it’s uncertain, stressful and costly. However, ETA can be fulfilling and profitable for buyers who start on the right track, experts said.

Below are recommendations from the pros:

• Speak with experienced entrepreneurs: Connect with those who’ve gone through the purchasing process. Ask for tips, surprises and what they wish they knew beforehand. See if they’d buy a company again. “Talk to a bunch of people, especially those who failed to acquire a business,” says Katherine Butler-Dines, CEO of Affinity Travel Co. “ETA is really risky. Make sure you’re comfortable with the range of outcomes that could happen.”
• Consider the risks: Be clear minded. Buying a business is not an easy way to make money. You’ll face extreme stress, work long hours and could face a financially challenging outcome. The results could be great but know that success isn’t assured.
• Get your financial house in order: While investors may help you with financing, you’ll need plenty of money on hand. “Think deeply about how you’re going to build the best financial resources,” advises Richard Flynn, president and CEO of accounting firm Flynn & Company.
• Strategically search for targets: Avoid buying a low-potential company as a passion project or investing in a high-growth one solely for the money. Toe the line between them. Select industry and company targets you care about that also have growth potential.

As you get more serious about taking the next step, Brad Felix of Fireroad, a partner company at the 1819 Innovation Hub, emphasizes the importance of crafting a solid business thesis. Ask the tough questions, such as:

• What role do you want at the company?
• What’s a good business model to own?
• What do you like doing?
• How will you buy the company?
• How could artificial intelligence (AI) affect your target industry?

Take advantage of resources from UC’s Center for Entrepreneurship and find mentorship through Cincy ETA. “Cincinnati is interesting,” Felix says. “It’s easy to meet anybody in this town. Get in front of as many people as you can” with your idea.

Get as many details as you can about the business – its balance sheet, operational structure and customer information. “One of the most important pieces when buying a business,” according to Kevin Armstrong, a director at Seibel & Katz CPAs, “is actually knowing what you’re buying.”

The full process of acquiring a small business can take time due to its many moving parts, but the right team will help push it forward. Negotiations between the buyer and seller will begin, so outline your demands and what you’re willing to sacrifice. Consider guides from leading programs such as UC’s Center for Entrepreneurship for additional instruction on the ownership transition.

If you thoughtfully planned your strategy and still feel exhausted, keep going and push through.

“ETA is complicated,” says conference organizer and UC professor Alex Burkhart, “and you need to surround yourself with the right people – whether that’s attorneys, accountants, bankers, intermediaries or brokers – but at the same time, you’ve got to rely on your own moral compass, read, gain inspiration and build a network of support.”

Once you’ve officially acquired the company, take time to celebrate – but not for long. Now you’ve got a company to run!

According to Mary Frances Coleman, founder and CEO of Spot On Strategic, new owners often either want to change everything or nothing. Thread the needle by solving any glaring issues while retaining whichever business components work.

And one final piece of advice from Coleman: “A true entrepreneur learns how to stop wearing all the hats and hand them off. Otherwise, it becomes a battle between ego and growth.”

Featured image at top: Presentation during the conference on entrepreneurship through acquisition at 1819. Photo/Mia Rohrer