This newsletter is written with the intention of educating business owners, like you, on the challenges that are faced when trying to grow your business beyond a certain level as well as when you are thinking about an exit.
There is a point in the growth cycle that many business owners reach where the business stops growing and reaches a plateau. When this happens, owners often have a grouping of mixed feelings about whether it is better to try to grow to the next level or to cash in on what you, as a business owner, have created so far and turn the business over to someone more experienced and committed to that next level of growth. We are hopeful that this newsletter helps you, the business owner, better understand the complexity that must be navigated for either the ‘hold and grow’ or ‘sell and go’ strategy.
The Owner’s Journey – Working on the Business
In growing a privately held business, you invariably navigated many levels of complexity to arrive at the successful business that you own and run today. These levels of complexity include the forming of the business, initial sales, and revenue generation, delivering on promises made during the selling process, hiring of staff, managing staff, finding the right advisors as well attracting capital and/or co-investors.
These are among the many, many walls of complexity that the successful business owner needs to climb to succeed in business.
Navigating these walls of complexity all too often leads to the habit of ‘working in the business’ more than ‘working on the business.’ It has been said that many owners are “too busy working in their business to take the time to create [additional] value”. Additional value often includes planning for and navigating the next level of complexity that accompanies the next level of growth.
This is the path of so many entrepreneurs that leads to an inevitable flattening out of the growth of the business, or ‘hitting’ rather than navigating the next wall. In other words, it is very rare that an owner will succeed at consistently reaching new levels of growth, as Bill Gates did, and take their business from a basement/garage to a publicly traded, global enterprise.
What To Realize When Your Business Hits a Plateau
If your business has grown nicely in the past but has started to plateau, it may be time to realize that your business may have reached a level of complexity that is more difficult to navigate than in the past and that your role in your growing the business is not allowing you the time to focus on hitting the next level.
For example, if you want to grow your business to a level beyond its current plateau, then it is likely necessary to embrace new concepts about the resources and focus needed for that next phase of growth, including:
- a new marketing and sales process and a new team may be needed
- new operations and systems may be needed to support the additional growth.
- financial controls may be needed.
- you may simply need to upgrade/replace your management team with folks with more relevant experience.
- you may simply be at a point where you need to grow your physical plant/office space with either a large capital investment or a long-term lease obligation.
Any one of these items may be difficult to do. However, it is likely a combination of these items that is needed for the next level of growth. That is a wall of complexity that you likely don’t know how to navigate.
The Complexity Around An Exit
So, having hit a plateau, you may be thinking that it is not worth the time, effort, energy, and resources that are needed to be committed to get to the next level. Perhaps it would be better to ‘cash in’ and turn your business and its potential over to someone else who has the experience to grow the business to the next level.
Any kind of advanced thinking in this area leads to a new recognition – that planning for an exit also includes levels/walls of complexity that also need to be navigated.
The complexity around planning for and navigating a successful exit is just as complex but of a different nature than a plan to grow to the next level. The starting point for navigating ‘exit complexity’ is to give consideration to your personal goals first. In other words, what would an exit from your business mean to you? Would it allow you to:
- have more time, money, and freedom?
- be able to engage in a new venture?
- spend more time with family?
- have financial security?
When you get past your personal goals, there is another level of complexity in terms of considering which stakeholders in your business would be most impacted by a change in ownership. How would an exit impact your employees, your customers, your family, your vendors, and all others who rely on your business?
Concluding Thoughts
If you have grown your business to a certain level, then you face a myriad of choices. Each of the growth and exit paths includes complexity that needs to be navigated to succeed. This newsletter is written to help you become aware of these competing complexities and to let you know that there are resources available to you to assist you with these difficult decisions.
If you would like assistance thinking through your growth and exit challenges, please feel free to give us a call.