It’s happened more than once…..but my meeting last week with this client reminded me to share this experience with others.
This talented entrepreneur built a business that leveraged his or her unique knowledge, expertise, energy or contacts. The business grew as a result of good work and leadership. Reputation, good timing and perhaps good fortune smiled on the company and growth accelerated to a point where this single person company expanded to over 30 people. This lasted for a number of years as the market was strong for this company’s services. Over time the markets shifted, but because the company did not notice at first, it started losing momentum one contract at a time and soon they were down to 15 people and no longer profitable. The decline continued over the years and seems the company run out of resources that could be dedicated to shift the business to new markets and explore new customer relationships or commercialize a new product or service.
Even in a declining phase the pace required more and more from this entrepreneur who was strategically embedded in all aspects of the business. Eventually the entrepreneur grew weary of the pace where he was needed to deliver on contracts, keep the existing customer relationships working and then develop new ones. Hence instead of building the business into a new strategic direction our entrepreneur was just trying to patch up the leaks and losses of contracts and customers with new ones, accepting the steady decline in business and harvesting it as long as he could. Finally close to hitting 60 our entrepreneur wants to get out.
But there is a problem…..Without the entrepreneur, there is no sustainable business and therefore no value to sell! A good run ends quietly.
This is not a happy ending story and one which Keystep could helped you avoid. Our experience has shown that it is possible to build a sustainable business and create an exit that will yield value to the founders and shareholders. It takes focus, time and resources, but building a sustainable business is possible. And it may take a different approach than the business owner is used to!
The key here is to start early! Start when the good times are still on, not when the business is in decline and lacking resources. Just because your business is running along at a good click, it does not mean that it is sustainable as you can see from the above case. And no one will buy a business unless there are sustainable revenues and profits.
Hence don’t put your head in the sand and push these thoughts off for another day even if your business is doing well now. Contact us and we can help you start a new page in your business’ life and make sure that there is value at the end. Even if you are looking for an exit 5 to 7 years from now, this is the time to call to give yourself the runway!