The first steps in my transition from MBA student to entrepreneur through acquisition.
Wow! After two years, thousands of pages read, hundreds of pages written, countless hours of sleep lost, and a rollercoaster of stress levels, I have finally completed the requirements for my MBA at the University of La Verne! So, now what?
There are a few different paths that I can take. Some have been thrown at me, others I’ve found, and more that I’m trying to avoid. Of the options I’m looking at, the one that is most appealing to me is the concept of entrepreneurship through acquisition. It is well known and accepted that most startups fail and I can post numerous articles as to why, but we will settle on the fact that they do.
The startup is the riskiest point in time for any business. This is especially true if you are entering pre-existing markets as the vast majority of entrepreneurs do. We all know about the guy who wants to start up a bar or the girl who wants her own restaurant. The problem is that passion and skill aren’t enough to compete in saturated markets such as these. The correct path may be to let someone else take that risk, overcome it, build a business…and then buy it from them.
This is something that I’ve been interested in for a while and have even written posts about small business industry consolidation and whether or not someone can successfully run a business without industry expertise. Granted, these are very conceptual, but there is support for the premise and even an entire book on the subject.
Think about it like this: Warren Buffett is the CEO of Berkshire Hathaway, which engages in the purchase of whole businesses which he and Charlie Munger feel will return value to the company. Among the portfolio of companies that Berkshire owns is GEICO, See’s Candies, and Net Jets. Now, do Warren and Charlie need to know everything about running an insurance company, a candy company, or a private airline? Absolutely not. They need to know business.
The three languages of business are accounting, finance, and economics. If you can speak these languages, then you have the fundamentals of running any business. There are other important factors like marketing, leadership, etc., but they are universal across any industry. This is why an annual statement from Microsoft looks the same as an annual statement from InBev. Business is business.
Yes, I am simplifying things. It is an intentional move because we have a tendency to overcomplicate things. Business isn’t complicated, but there are a lot of parts to be aware of. There are a lot of tools that you need.
I have been given all of the tools that I need to be successful. I’ve examined the financials for EV manufacturers, broken down supply chains of chemical companies, created a marketing plan for a coffee company, and even went into great detail about supply chain vulnerabilities (looking at you, SolarWinds). If I am not willing to use these tools, then it would be a massive waste of potential.
So, what are my plans? The long and short of it is to create a micro-Berkshire Hathaway of sorts. I am currently sourcing targets for acquisition on the web and speaking with some business brokers. I’m going to put my business education to the test as I audit financial and business operations in the search for a business with the potential to deliver ongoing value for my investment. Preferably something that will create a small cash pile to make a near-future acquisition of another business and so on.
On the structural side of things, I’ve already begun the process of organizing my company. As soon as I turned in my last assignment, I went right to the CA Secretary of State website and filed my Articles of Incorporation and have spent the last week organizing my Board of Directors and getting things ready for the big push forward.
My measure of success is clear. I want to create a stream of income from traditional businesses that will fully fund a secret project that I would like to begin working on. (If you want the details on that, you’ll have to sign a nondisclosure agreement and pay me!) If I can create that stream to fund this project, then I will have been successful.
The only thing that I can expect from here on out is the unexpected. Like we say in the military: no plan ever survives first contact. It doesn’t matter how well you prepare, how good your business plan is, or how qualified your team is – there will be unforeseen challenges and I welcome them all.
I haven’t been this motivated or driven since I was on active duty in the U.S. Navy. I had to temper that part of me because if I let it out too soon, then I likely would have become anxious and not finished school. I’ve finished now, and, in the words of Admiral David Farragut, “Damn the torpedoes! Full speed ahead!“
Christopher Padilla 
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