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Loading...By Fiona Hudson-Kelly, author of Grow and Sell your Startup
In the UK, the majority of companies fail to scale and sell because they don’t start with the exit in mind. Often, an entrepreneur comes up with a great idea and they develop their product(s) and expect organic growth. They see some revenue but only enough to tread water, so they remain a small business and make it their day job.
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By starting with a longer-term view in mind, entrepreneurs can take their journey further. They can scale the business, develop a name for themselves, and then sell on, gaining seed money for their next venture as well as a payoff for their hard work.
Why don’t more entrepreneurs start with a long game in mind?
There can be a knowledge gap; know-how is important to navigate legal, compliance, and fiscal management, for example. Or there’s often no one holding the entrepreneur’s hand; a good coach or mentor will both hold the long-term plans to account as well as help maintain a sense of perspective that can otherwise get lost. And then there’s sometimes just a lack of ambition; some entrepreneurs are simply attracted to the idea of self-employment and all the flexibility that being their own boss offers. Scaling and selling is hard work and contains an element of risk that some entrepreneurs don’t want to engage in.
What needs to change?
Entrepreneurs who want to scale and sell their businesses need a shift in mindset. Rather than seeing the business as a lifestyle choice (an extension of themselves), they need to separate themselves from their business.
As parents, we raise our children to be independent in the world. At first, they are small, weak, and incapable. Then they grow and can be more independent, but still need our help. Then, finally, they fly the nest, and we must trust them to make their own way in the world.
We need to think of our businesses in the same way. At first, we need to be very hands-on – it may just be us carrying the load. Then, once it survives infancy, we can relax a little and take a step back. Then, we can separate almost completely.
Change is necessary
An expanding business is twice as likely to survive. That’s good for prosperity on a national level and is immensely exciting and satisfying on a personal level. So, how do we change?
Real Role Models
One of the most important things we need to change is getting real role models to share their stories and experiences. The UK, like much of the world, has become obsessed with the cult of celebrity. We look up to and admire superstars, like the entrepreneurs on Dragons’ Den. The problem is that they are a few in a billion, making successful entrepreneurship seem like a winning lottery ticket.
Most successful business leaders aren’t on the television. They have quietly walked a successful path to prosperity and now keep a low profile enjoying their wealth. These are the role models we need to hear from, not celebrity entrepreneurs.
A Shift in Conversation
There is a lot of conversation around starting a business, which is a difficult stage where reading and researching do help. So, it makes sense to have conversations about how to start a business.
What gets neglected, however, is the conversation around scaling and exiting a business. In fact, this should all be part of the same conversation. Scaling and selling need to be on the horizon from the outset to spot and capitalize on the right opportunities.
Starting with the end in mind forces us to think differently. Rather than seeing the company as being an extension of oneself, it becomes a product that can grow with the marketplace and be sold when the right opportunity comes along.
Developing Know-how
Even those who have studied business or entrepreneurship struggle with knowing how to scale and sell their companies. Their go-to is often to seek investment with a fancy pitch deck. But seeking investment means selling part of their business (often more than they want) at an early stage, reducing their incentive and drive to make it successful.
For those without a formal education in business, it can be even harder. They might have a hungrier, do-or-die attitude, which can be very helpful in growing the business without investment, but they are likely to get stuck along the way.
Better role models and more conversation around scaling and selling will definitely help develop know-how as well as demonstrate that investment isn’t always the best option. We can also try to improve access to educational resources, whether formal or informal, to provide some of the more technical know-how.
Entrepreneurs, do this
Try to imagine what your business will look like in 10 years. Try to detach yourself when you evaluate your idea. You want to see what it could look like even if you weren’t involved. Imagine the market in 10 years. Is the opportunity big enough? Which roles do you need to fill to make the business work? What will the competition look like? How will technology impact your business over the next decade?
Shifting your thinking into the longer term creates a goal, and reaching that goal becomes far easier when you can see how to orient your business decisions to focus on arriving at your desired destination.
Fiona Hudson-Kelly has built two businesses and sold them for life-altering amounts of money. She now helps owners of small businesses scale and exit, enabling them to realize their dreams. In her new book, Grow and Sell your Start-up; How to create a business you can sell for Millions, Fiona explains how she did it, and how you can too.
The views and opinions expressed in this blog post or content are those of the authors or the interviewees and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.
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