by Steven Pivnik, Founder & CEO of AIP Advisory and author of “Built to Finish: How to Go the Distance in Business and in Life”
Every business journey starts with a goal. Some entrepreneurs want to build a legacy, creating an enduring, multi-generational enterprise that occupies the business landscape for decades to come, while others are simply tired of working and want to be their own boss, set their own hours, and make their own decisions.
Another common entrepreneurial goal is building a business and getting out, preferably making a bundle in the process. In some cases, this involves an exit-oriented entrepreneur who has the goal of selling the business quickly and moving on. In other cases, it may involve a serial entrepreneur who wants to transition leadership rather than sell, continuing to own the business while focusing their energy on other business pursuits.
In either case, there are unique strategies that deliver the best results. Those who desire to become exit-oriented and serial entrepreneurs should consider the following components when mapping out their business journey.
Strategies for the exit-oriented entrepreneur
Prevailing business wisdom says slow and steady growth results in stability and sustainability. This approach allows the business to carefully craft a culture, find its place in the current business landscape, and support a focus on quality over quantity.
For the exit-oriented entrepreneur, slow and steady growth is not the best approach, since a successful exit requires quickly attracting the attention of investors and buyers. Hockey stick growth is better than slow and steady if you are focused on a quick exit.
Aggressive user acquisition is one strategy exit-oriented entrepreneurs will often pursue, which involves amassing a large user base for your product, even before developing a clear monetization model. To the investor or prospective buyer, rapid user adoption can be an indicator of future growth and earning potential.
Pursuing subscription revenue models is another strategy that can attract prospective buyers and lead to a quick and desirable exit. These models promise buyers recurring revenue, which makes future performance more predictable. Even when overall revenue remains relatively modest, subscription-based businesses will usually value higher than those focused on one-time sales.
Strategies for the serial entrepreneur
If your goal is to retain control of your business while relieving yourself of day-to-day leadership responsibilities, choosing a successor is one course to consider. A strong succession plan can ensure your business endures without your involvement and, when executed well, can be the key to taking your business to the next level.
The first step toward developing an effective succession plan is giving up on the dream of finding a perfect match. In fact, replacing yourself with someone like you — the same qualities, perspective, and personality — is not what you want.
As a serial entrepreneur, your strength is getting the business off the ground, so look for a successor who has the temperament and skills to take it to the next level. Ideally, you want to bring in a leader who has experience with transitioning from startup to growth and beyond.
One thing you will want to match as you consider a successor is your company culture. The values you’ve established and the team you’ve built around them are the foundation of your organization. You are looking for someone who can take the baton and gain ground in the next leg of the journey. A successor who doesn’t support your values can alienate your team and bring progress to a grinding halt.
You will also want to look for a successor who is excited about the changes happening in the broader business culture. Artificial intelligence is currently reshaping the business landscape, empowering tools that take efficiency and innovation to new levels. The leader who can take your business to the next level will understand the significance of cultural shifts like AI and how to leverage them for business growth.
As you seek to develop a sound growth and exit strategy, a focused mindset will make all the difference. Whether you want a fast exit or succession, you must keep that goal before you constantly. The daily decisions you make every step of the way are the ones that determine if you will make it to the finish line.
Steven Pivnik is a serial entrepreneur specializing in information technology and the author of “Built to Finish: How to Go the Distance in Business and in Life.” He grew his last company, Binary Tree, and realized a successful exit and selling it to Quest Software. Steven now advises other founders and entrepreneurs looking for similar corporate growth and a company sales journey.