Starting a business of your own is always an exhilarating step to take in your life/career.
And although it takes courage to take the leap into the great unknown of entrepreneurship — which may be the wisest choice for your next career move — quitting your job and opening the doors on a venture of your own is really the easiest part of the high wire act.
Far more challenging on every emotional and intellectual level is to turn your venture into a success. And in my book, the real test and reward is can you sell it at some point along the continuum. For a significant sum. One that rewards you with a lump sum of cash and/or stock that to provide you with financial freedom.
The ability to sell the business you launched not only enriches your bank
account but it should be a goal because it is proof positive that you made the business work to a high level. That’s because no one wants to pay a healthy premium for a failing business.
The question is, how do you grow a business to the point that you can walk away with millions in return on your sweat equity. As one who has sold a business successfully, the following are my key points for pulling off this hat trick/this crowning achievement of your career:
*As early in the curve as you can, seek to defy your own ego and make your self dispensable. The instinct to be just the opposite makes the enterprise a one-person show. That is a barrier to growth and a red flag to potential buyers. If you are indispensable, they can’t let you go.
*Recognize as you go into the process, that your goal
should not be focused primarily on earning a handsome salary (that’s a “job”
mentality) but instead on building equity that a third party will be willing to step up and buy from you. That comes on top of the financial and psychic rewards of a job and it’s a payment you no longer have to work to earn. Think of it as a leaving bonus.
*Create something–be it an innovation or a great sales force — that enables you to reap a high multiple for the business, beyond the industry standards of x times EBITDA.
*Never fall victim to the fairy tale that because your business is faring well, that it will always maintain an upward trajectory. Few blunders are as damaging to a business than the erroneous belief that it has found its permanent groove. That is precisely the time that competition or some other threat hits from out of nowhere, leaving the company headed on a downward slope. This puts you, the owner, in a weak position: precisely where you don’t want to be when you are negotiating a sale.
To me, the sale of a business is the ultimate exit strategy. And if you are going to go through the challenge of building something, have the payoff in mind from the start.