Exiting a company can be a rewarding processfor entrepreneurs, but guidelines for many of the steps needed simply don’t exist. Rick Smith, Managing Director of insolvency and company rescue experts Forbes Burton, suggests that asking for help may be the best option.
There seem to be two camps in business: the long-term strategists who have a singular vision and want to succeed in bringing a business to a sustainable future, and those who want to churn, earn and sell.
Entrepreneurs tend to lean heavily towards being creative thinkers, which is great. However, because the creativity in them burns so brightly, they often lack strength in other required aspects ofbusiness. This can lead to grounding problems, and flights of fancy take precedence over the more banal day-to-day elements of company life.
If they understand this early on, the best entrepreneurs build a team around them that strengthens their areas of weakness to ensure their business is running as smoothly as possible.
However, those who tend to run their business on gut feelings and hunches should seek the right external advice or at least investigate outsourcing options.
The likes of Tesla’sElon Musk have found out the hard way that businesses are collective entities and don’t equate to just one person. Musk recently appeared dismissive of legitimate interview questions from a stock analyst in a high-level meeting and responded in such a way that it has harmed his business reputation immediately.
Such rash decisions should not be made on the spur of the moment; rather, a considered, measured response is needed. This is particularly true when you are in a volatile or high stakes scenario.
Another example is the investor and philanthropist Warren Buffet. Buffet has cleverly crafted a team of trusted confidantes over many yearsthat support and strengthen his inefficiencies, enabling him to concentrate on what makes him successful.
The magpie effect
Entrepreneurs are often skilled at establishing and growing start-ups but they lose interest once routine sets in.Often referred to as ‘the art of the start’, it can be an addictive process for those who like to explore and challenge themselves.
Once the sheen fades, entrepreneurs often lose their motivation. If a business or venture is not a creative process, then the next ‘big thing’ will draw their attention. Often an entrepreneur doesn’t needa team around them to manage the process of exit.
Remember your roots
It’s often at the back of many entrepreneurs’ minds but there’s value in remembering original investors’ needs. If you try to exit before you’ve satisfied those who have helped you-you could run into untold problems.
Prep is key here; have in place contractual agreements on selling the company. Do investors want to be given first refusal on buying, or are they happy to leave with their investment refunded? Do they expect something more? Are they likely to keep investing in concurrent or future ventures? It’s a complex web that should be untangled long before a snap decision is made.
Those caught out at this stage will be those who have accepted funds from sources less regulated and set in stone than others, or from investors who haven’t made clear what they expect of you. It’s often an entrepreneur’s decision to exit, but it slowly creeps in on other people involved as time goes by.
Plan to exit
Serial entrepreneur? Churner? Then the best option is to set out this plan to as many people as you feel comfortable with from the start. If your whole raison d’etre is to build something up simply to sell it, make that something that runs through your businesslike writing through a stick of rock. If you are planning for the future sustainability of a company instead, make that stick in people’s heads too.
Having a clear strategy in place is healthy, even if what you plan to do is burn out a particular idea in order to make it to your next perceived level. Entrepreneurs move fast by their very nature, but sometimes it pays to slow down.