Acquisition vs. Ideation: Is Acquisition Entrepreneurship Your Best Bet? Acquisition entrepreneurship isn't right for every startup idea. But there are a few things you can do to position yourself for success.

There are two things we (think we) all know for sure about Elon Musk: He's a founder of Paypal, and a founder of Tesla -- two of the most innovative companies in the past 100 years.

But "founder" doesn't actually describe how those companies happened.

Musk's digital payment company, X.com, acquired Peter Thiel's company, Confinity. And that merged organization became PayPal. In a similar turn of events, following a 2002 sale to eBay that netted him $180 million, Musk went on to become the leading investor in a little car startup founded by engineers Martin Eberhard and Marc Tarpenning. Musk, CEO of Tesla, eventually claimed co-founder status -- something for which he was sued.

Related: 19 Times Elon Musk Had the Best Response

The general assumption is that entrepreneurship is synonymous with creativity: Entrepreneurs are those plucky visionaries who are dreaming up the big ideas to disrupt the status quo, right? Well, maybe. But sometimes, the most successful entrepreneurs don't think of the big ideas -- they buy them.

Ideas are a dime a dozen.

There are a lot of people with ideas out there, but there are significantly fewer people who know how to execute them, apparently: A little more than half of businesses in the United States fail in the first four years.

A great idea is important, but success is built on timing and execution. The venture capital industry is looking to identify the next adolescent market and fund the entrepreneurs with the greatest chance of succeeding in it. So, maybe instead of trying to think up the next big idea, your goal should be to spot the small company that's already found success, acquire it and build it to its fullest potential. This is what I call acquisition entrepreneurship.

Related: Intuition or Data: How Do Venture Capital Investors Evaluate Investment Opportunities?

Don't start at square one.

Acquisition entrepreneurship begins with keeping an eye out for success. Finding a small business that already has revenue and earnings provides many benefits.

First, you've found a company that has an established product-market fit. Scenarios of when it doesn't "fit" are the leading reason for startup failure. Great technology and great data won't be helpful if your business doesn't have a market. In other words, find a company that has proved its potential to scale.

Second, companies that already have paying customers offer potential for a feedback loop. Information on product benefits and complaints are collected from the customers; then, that feedback can be used to consistently refine your product.

Third, valuations on small businesses are based on historical earnings. Startup valuations are based on a discount of future earnings, meaning the value of potential cash flow at a discounted rate. That way, you can be more confident that an established business valuation is accurate and more likely to pay a return.

Finally, acquisition entrepreneurship solves the problem of raising funds. Anyone launching a business can take years to amass capital from investors. That's why search funds and accelerators, in which startups are acquired and funded via a single source rather than a collection of investors, have become common. Many acquisition entrepreneurs are taking advantage of Small Business Administration loans, which take weeks rather than years, in order to acquire and own their company outright.

Build a better mousetrap.

Acquisition entrepreneurship isn't right for every startup idea. But there are a few things you can do to position yourself for success when you take the leap into buying, then building, a company:

1. Identify your strengths.

Buy a company that is aligned with your skill set. Gallup, for example, has determined the 10 talents that make an entrepreneur more likely to build a large business, create jobs and exceed profit and sales goals.

To determine where you fit best, build a résumé and look at your biggest accomplishments. A Myers-Briggs personality profile or a personal SWOT analysis (strengths, weaknesses, opportunities and threats) can specify the internal and external factors that are favorable or unfavorable for you to achieve your objectives.

Case study? Consider Dan Peskorse. He built an online business from scratch and successfully exited. He was, and is, proficient in online marketing and developing relationships with influencers, and he's talented in business development. Eventually, he found ThinkFitLiveFit.com, which was listed for sale with Quiet Light Brokerage, where I help list online businesses for sale. He was passionate about fitness, loved the product line and knew he had the skill set to grow the business.

So he closed on the business just a couple of months ago and has already seen more than 10 percent growth. This is a great example of someone utilizing his or her expertise to grow an established business.

2. Get "deal flow."

Investors are constantly looking for potential opportunities, and deal flow will follow where growth is likely to happen. Entrepreneurs who have been successful can generate interest. Getting on the radar of an interested financier can lead to investments a lot more quickly.

So, reach out to intermediaries, and join email lists to find new listings, via organizations like M&A Source, IBBA or AM&AA. Search funds are at an all-time high right now, as investors and startups have increasingly sought to cross the acquisition entrepreneurship bridge.

3. Target a business with staying power.

Research a business and the specific industry for threats. Or if technological innovation is under way, predict how much disruption will occur. The best acquisition entrepreneurship opportunities arise when advancements to an existing space have substantial growth potential.

For example, Schick's parent company, Edgewell Personal Care, bought Harry's when it realized the staying power in the digital business model. Major companies have realized that direct-to-consumer brands aren't just disruptors; they can be a lasting force. In fact, Unilever purchased Dollar Shave Club in 2016, and Walmart bought online menswear brand Bonobos in 2017.

4. Bring "entrepreneur" to "acquisition."

Many acquisition entrepreneurs will try to evaluate a potential acquisition based solely on the business itself, forgetting that once they're involved, the company will be the business plus the entrepreneur. This is where focus and vision come in -- your ability to channel your inner Musk.

Look for the growth opportunity the company provides. This can be done by understanding the business and looking at industry trends. Delve into reasons for the business's success to see what is possibly holding it back. Follow customer trends to see how behavior has changed and what needs to be done to lay the groundwork for growth. Figure out what the business does better than anyone else. Now, can you amplify the one metric that drives the economic engine?

Related: Search Funds: What You Need to Know About This Investment Model

If you neglect these considerations, you're likely to become one of those potential buyers who are constantly kicking the tires rather than driving off with the car. It takes clarity and urgency to successfully acquire a business, so make sure you're clear about why you're the perfect entrepreneur for a particular venture and vice versa.

Then, it will be time to take the business and truly make it your own.