The spotlight is definitely on the traditional definition of “Entrepreneurship” – identify a problem, build a startup, fund a startup and turn it into a miraculous Unicorn, however, we want to put some pressure on this definition and introduce a second – “Entrepreneurship Through Acquisition“.
Entrepreneurship is not only about starting a business from scratch but also about growing an existing business into something even better. Royce Yudtoff, a Harvard Professor and co-author of Buying a Small Business: Think big, Buy Small – Own your own company, mentions “if you are a manager thinking about making a change in your career or a newly minted MBA looking to begin a management career, this is an opportunity you should consider: You can buy an existing business, right now, and run it as CEO. We call this entrepreneurship through acquisition.”
Let’s take a look at some inspiring stories:
Mohed Altrad, Altrad Group
He purchased a failing scaffolding manufacturer that was $1 million in debt. He had the vision and saw the potential. The Altrad Group is now a global leader and he’s worth $1.6 billion dollars.
On his return, he tried to persuade the owners to offer traditional espresso beverages in addition to the whole bean coffee, leaf teas and spices they had long offered. After a successful pilot of the cafe concept, the owners refused to roll it out company-wide, saying they did not want to get into the restaurant business. Frustrated, Schultz decided to leave Starbucks in 1985. He needed $400,000 to open the first store and start the business. He simply did not have the money and his wife was pregnant with their first baby. Jerry Baldwin and Starbucks co-founder Gordon Bowker offered to help. Schultz also received $100,000 from a doctor who was impressed by Schultz’s energy to “take a gamble”. By 1986, he had raised all the money he needed to open the first store, “Il Giornale”, named after the Milanese newspaper of the same name. The store offered ice cream in addition to coffee, had little seating, and played opera music in the background to portray an Italian experience. Two years later, the original Starbucks management decided to focus on Peet’s Coffee & Tea and sold its Starbucks retail unit to Schultz and Il Giornale for US$3.8 million.
Schultz renamed Il Giornale with the Starbucks name, and aggressively expanded its reach across the United States.
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