The Risks of Acquisition Entrepreneurship

I have spent my last 8 articles of this series writing about how amazing acquisition entrepreneurship is. You can acquire a business for little to no money down, the business is already cashflowing and earning you money from day one, and you will build equity just as fast. However, I would be remiss if I did not outline some of the risks involved with acquisition entrepreneurship. While it can lead to some amazing wealth and opportunities, it is not without risk. Below are three major risks associated with acquisition entrepreneurship. <h2>Debt</h2> If you acquire the business through a small business administration (SBA) loan, which typically requires 10 percent as a down payment, you will be leveraging debt to acquire the business. Let’s say you purchase a business worth $1,000,000 using an SBA loan. You would be required to put $100,000 down as a down payment and get an SBA loan to cover the remaining $900,000. The business (before debt) cashflows $300,000 per year. The 10 year SBA loan will require a payment of $135,000 per year. This means that you have a net profit per year of $165,000 — sounds pretty awesome, right? It is, but you need to remember the risks associated with this. <a href="https://medium.com/@escapethe9to5/the-risks-of-acquisition-entrepreneurship-8c82b4a772d0">Learn More</a>