The Dream We All Share (And Why Most of Us Never Start)

Episode Transcript

Introduction to the Dream of Entrepreneurship

A lot of us share the same dream. The dream of running a company, about being your own boss, about deciding when to work, where to work, but also with whom to work. But the harsh reality is that most of us, we never start, and those who do fail.

The Alternative Path: Buying a Company

But what if I told you that there’s a different path to entrepreneurship, a path that’s less obvious, but that’s still very interesting.

That’s the goal of this podcast, Searchers. The idea is to buy a company instead of starting one from scratch.

Understanding the Financials of Buying a Business

And to give you an example, often those companies that are for sale can be bought for roughly three to four times the multiple of what they earn each year. And I’m simplifying here, of course, but just for the sake of the example.

So if this company earns the owner 150,000 a year, likely purchase price can be 450,000. And this means—and now listen carefully—that you just can sit there. Again, a simplification, but you could do nothing and you earn back your initial investment after three years.

Comparing Buying vs. Starting a Business

And if you compare that to startups and the failure rate of startups, that is often higher than 90%, I feel that there’s an advantage because those businesses, they have loyal customers, systems and cash flow in place.

And I feel that the time is right for that because there’s a huge wave of baby boomers of the baby boomer generation now retiring, of people who have set up those companies who have done the struggles already and who are now looking for a successor. My name is Alex Hoffmann and I’ve spent years of research into this field, and my goal is to, yeah, to reframe the path to entrepreneurship together with you because.

You and I, we share the same dream, the dream of being an entrepreneur. And I recommend and feel that buying can be so much more interesting than building, starting from scratch.

Personal Experiences and Insights

For me personally, the realization came when I compared a friend who bought a company with friends who started the company, and when I just looked at them.

One was calm when the others were really stressed because they hadn’t yet earned a, earned a dime. They were still testing everything and they were quite stressed. But when it really struck me is when I bought a small website, a website that was earning roughly $400 a month. At that time, the asking price was $10,000, 400 a month in earnings, 10,000 in buying price.

So to make it more specific, that means that I could earn back that 10,000. I needed to invest initially, roughly about two years later. Just compare that to my friends. Three years in still losing money. No startup money earned yet. Quite the opposite. Investor money lost. Really? And I’m not saying that starting a startup is, is bad or anything.

I’m just saying for those of you who have that dream and have haven’t had the chance to realize it yet, consider this alternative. So my key insight then came that when I bought this website and I had it in my hands, I started to improve it and I managed to grow it from $400 a month to roughly 2000. So I got my money back even earlier than two years.

So I learned that you can earn income without reinventing everything from scratch. And that, that was when it really. Struck me and I really couldn’t stop thinking about it.

Diving Deeper: Research and PhD Journey

And that then led me, during COVID to even dive a step deeper into this whole field. So I did my PhD on entrepreneurship through acquisition at HHL University in Leipzig.

And I just enjoyed talking to the people. I enjoyed interviewing buyers, sellers. I enjoyed reading the papers. And that was the reason why I said, you know what, there are more people out there who might be interested. And the interesting thing is startups, they often have an support system. You have blogs.

There’s a lot of buzz on the street, but buying a business really doesn’t.

Podcast Goals and Community Invitation

So my goal here with this podcast is to show real acquisition stories, to show the successes and failures of how to find deals, how to do due diligence, how to do financing. And I invite everybody from the person just being vaguely interested to really experienced acquirers, to listen in, to share your feedback, and become part of this community.

Conclusion and How to Connect

If you want to look me up, find me on LinkedIn, Alexander Hoffmann two F to N.

Yeah, and besides that, there’s not much more to do. Just hang on and wait for the first interview that’s about to come. Thank you, and bye.

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