SMB Newcomers Tutorial Posts - Part 2: Decisions before you search

Here's Part 2 of my end-of-year intro to #smb #acquisitions, specifically designed for industry newcomers. This post focuses on 6 decisions everyone should consider before jumping into a #search:

1) Decide whether they want to search at all. Risk-averse entrepreneurs should consider why they value acquiring a small business over a corporate role with a steadier paycheck.

2) Decide whether they want to operate a business as a CEO or play more of an investor role, owning multiple small businesses operated by others. Entrepreneurs that like making deals but dislike managing companies could consider becoming a business broker.

3) For those that want to operate a business – decide between different search fund models. Traditional search funds take more money from investors, buy bigger companies, and hold less equity than self-funded search funds (more on different search methods in a future post).

4) For those that want to invest, but not operate: do they have the funds to do this on their own? If not, how can they convince investors to back their venture? Building a portfolio of SMBs may be difficult for an entrepreneur early on.

5) Similarly, entrepreneurs interested in business brokerage may benefit from joining an existing firm or becoming a franchisee of a large national brokerage before branching out on their own.

6) Entrepreneurs should think about their personal thesis and competitive advantage. “Why them? Is the timing right? Why this particular cross section of industry, location, and company size?"

Hope this was helpful! I'll be posting these on a regular basis over the next few weeks, doing quick tutorials on different aspects of search. Follow me here and check out all we've built to support searchers at Private Market Labs as well!