Buying a Business: A Practical Path to Entrepreneurship

The Business Development Bank of Canada (BDC) is advocating for entrepreneurship through acquisition (ETA) as a more viable strategy for aspiring business owners compared to the traditional startup model. The bank argues that purchasing an existing company offers a less risky and potentially more profitable path to establishing a business.

Guillaume Bédard, Senior Client Partner at BDC Advisory Services, believes that the focus on startups in Canada has overshadowed the benefits of acquiring established businesses. He notes a common misconception that starting a business from the ground up confers greater entrepreneurial credibility. However, Bédard points out that startups often require substantial capital, face a high failure rate, and are intensely focused on rapid growth, which may not align with sustainable business objectives.

ETA, according to BDC, provides entrepreneurs with immediate access to cash flow, an existing client portfolio, and proven operational systems. This significantly reduces the initial uncertainties and risks associated with new ventures. Often, these acquisitions involve retiring founders who are willing to mentor new owners, ensuring a smoother transition and the preservation of business legacy. This approach contrasts with the high demands often placed on startups by venture capital investors.

Devesh Dwivedi, Lead Business Advisor for BDC Advisory Services, summarized the appeal: "Buying an existing business gives entrepreneurs cash flow, customers, and proven operations from day one. That makes it a lower risk, higher impact path than starting a business from scratch." Furthermore, models like management buyouts or employee ownership can foster higher engagement and performance as employees directly benefit from the company's success.