Business Plan Help

IT’S NOT A STARTUP; IT’S A JUMP START – PART 3: HOW TO GET STARTED
By Steve Mooar
Manhattan, NY, September 2, 2005 – This article covers what an entrepreneur should do to get started on a Jump Start strategy. It is Part 3 of a 5 part strategy series on the Jump Start. If you missed the Introduction or first 2 parts of the series, they can be viewed at www.bizplanhelp.com/blog/blog.html. Part 4: Financing the Acquisition will cover ways to seek and obtain funding.

Business Plan
Despite the entrepreneur’s intention of utilizing one of the Jump Start strategies outlined in Part 2 of this series, Advantages of a Jump Start Over a Startup, you still need a business plan. Even if you are going to make the acquisition with cash out of your pocket and run the business yourself without help, a business plan is a great way to get organized. The exercise of creating the plan often shows areas of angst that would not have otherwise been apparent. I am a strong advocate for every business having a business plan and regularly updating the business plan.

Jump Start Hint: Download a free Business Plan Outline to get you started.

Identifying Targets
Whenever I am writing or lecturing about mergers and acquisitions (M&A), I refer to the company being acquired as the target or acquisition target. So, with the business plan complete it is time to identify your acquisition targets. Review your venture and make a list of the characteristics in an acquisition target that would fit your new venture. When developing the list put the characteristics in order from most important to least important.

Jump Start Hint: For a few clients I have worked with them to develop a list that includes a weighted point system, where the more important characteristics get more points. When looking at targets assign the points and you have another way to help make a decision.

If the new venture is a restaurant then here are some of the items that me be on your list:
- Location – a specific town or busy road in a town
- Real Estate – owned or leased?
- Fixtures – bar, waiting area, properly equipped kitchen
- Existing Amenities – Outdoor seating if you are in a warm area.
- Size – number of people it holds and size of parking lot
- Genre – what type of food is served at current location

In Part 2 of this series a few different approaches were introduces to utilize the Jump Start strategy. Let the characteristic list drive the approach, not the other way around. This way you do not limit your characteristic list to items that match the approach, because you may find after completing your list that there is a better approach. Returning back to the restaurant, before creating the list one might think the best Jump Start approach is to buy an existing restaurant in the same genre as an ongoing entity; however, after viewing the list one sees that Location and Real Estate are the most important characteristics. Genre is last on this list and the target being open is not even a factor, so this entrepreneur is looking to purchase assets.

Finding Targets
Locating targets that meet the list can be a very daunting task for anyone, even if they have merger and acquisition experience. There is good news, the Internet has made searching for business for sale as easy as finding a best selling book. There are web sites that allow users to search for business for sale by industry, location, selling price, revenue, and other criteria. Some examples are:

- BizQuest – http://www.bizquest.com/ – is a free site that allows users to search by keyword, location, industry, and industry segment. The site will also help you find a business broker as well as save a search and have an email sent daily with new listings that meet your criteria.
- International Business Brokers Association, Inc. (IBBA) – http://www.ibba.org/ – is a site that allows users to search for businesses for sale and business brokers.
- BizBuySell – http://www.bizbuysell.com/ – has the same search functionality as the other two sites, but also includes franchise search and search by type of sales such as asset sale, startup, and real estate sale.

Jump Start Hint: Don’t forget general search sites when looking for acquisition targets. Use the advanced search options in Google (http://www.google.com/) and Yahoo (http://www.yahoo.com/) or any other Internet search tool that you are comfortable with.

Two of the sites mentioned above have business broker search options. Working with a broker to guide you through the acquisition process is a good option. Your best bet is to select a broker located in the area you want to open your business and/or a broker with experience in your ventures industry. They will have already worked on projects like yours and will also have knowledge of what business are for sales. Like anyone you are going to work with, meet the broker and make sure that you are comfortable working with them. Do some legwork like you would for hiring an employee and ask for a resume and references. Many brokers also have web sites, which will allow you to do some research.

Another way of finding targets is people networking. Hiring a broker gives you a leg up since a good broker is already networked in the local business community. But other sources are trade shows, chamber of commerce, banks that specialize in small business, business trade groups and other business groups. The car leasing company that I mentioned in Part 2 of this series found out about the car rental business target from a loan officer at a bank.

There is also nothing wrong with cold calling. If you see a business you like at a trade show, on the internet, or driving down the street, then call and find out who the owner is and ask if their business is available. Being political and polite will leave the owner flattered about your interest even if they are not interested in selling. They could also become an ally to guide you through the industry or know of others interested in selling. I have been involved with a few transactions where the target was approached at a trade show and although not looking to sell ended up taking advantage of the situation for the exit opportunity.

Conclusion
Using a Jump Start strategy does not mean you do not have to get organized. Do your homework and put together a business plan and then create a prioritized list of what you are looking for in an acquisition target. If you are not comfortable with doing your own leg work to find acquisition targets, then use the Internet and/or find a business broker. Finally, don’t settle, look at a lot of different companies even if you do not come to terms with a target, you learn something with each meeting.

About the Author
Steve Mooar has over 10 years experience in Operations and Information Technology and has worked on numerous Startup and M&A projects. He is the president of Eagle Strategy Group, which provides Strategy Consulting Services to small and medium sized businesses. Eagle specializes in developing strategic solutions in Operations, Information Technology (IT), Startup, and Merger and Acquisitions (M&A), as well as provides interim management support. For more information go to www.eaglestrategygroup.com.