When successful entrepreneurs come to mind, thoughts often turn to startup savvy, visionary leadership, and the groundbreaking products propelling many ventures to the top. But there’s more to businesses success than just getting an enterprise off the ground. Effective entrepreneurs must also have flexibility, knowing when it’s time to part ways and move on from a business venture.
A recent Entrepreneur article highlights the rise and fall of a promising technology company, using the example to illustrate some of the signs it might be time for a business leader to separate from a startup.
It May be Time to Make a Move
Augmented reality company, Meta, was a promising player in the AR industry, following its 2013 startup launch. The forward-looking venture had raised more than $80 million and earned a valuation worth three times that amount. But earlier this year, after bad news emerged about the company’s health, a court filing revealed Meta is insolvent and for all intents and purposes, sidelined from further development of its AR technology.
The lesson learned from Meta looms large for other startups; sometimes you run out of options, and know it’s time to make a move.
A Hard Pill to Swallow
Even when the writing is on the wall, it can be hard to let go of the reins, operating your startup business. The decision to move on and the process of letting go are fraught with challenges, ranging from overcoming personal obstacles to sorting out the financial hurdles preventing you from carrying on.
Committing to sell or make another move may drum up feelings of pride, relief, frustration, sadness, and uncertainty about the future. Experiencing this stew of emotions is to be expected; the effort and energy devoted to launching and running a business create close ties to the enterprise, often drawing comparisons to raising kids. Letting go of your “baby” may not be easy, but it is the right thing to do under certain conditions. Part of being an effective business entrepreneur is knowing when and how to let go and set the wheels of change in motion.
Practical lifestyle concerns may also be brought to the surface, when parting with your business. You’ve likely followed a consistent routine keeping your venture on track, so removing a big piece from your daily schedule can lead to angst, amounting to an identity crisis. A business sale further complicates the circumstances; most deals encounter hiccups, adding stress and anxiety to an already challenging transition.
Making it Happen
Most business owners don’t start formulating an exit strategy, until the prospect of moving on becomes a high probability. Holding on too long can leave you with fewer options, so it’s important to recognize the signs and signals alerting you it is time to let go. Entrepreneur guest writer, Terry Lammers, identified a few signals that may indicate the time is right to start working toward a separation from a business startup.
You’re Starting to Coast – Fresh business professionals are full of enthusiasm, continually seeking ways to improve business operations, profitability, products, service, and other aspects of their ventures. Over time, business owners may become less willing to make the changes necessary for continued growth and expansion. Some grow risk-averse, skittish about investing large sums of money in the same businesses they’d once have sunk everything. Once owners start coasting, productivity often slips and employee performance may begin to reflect a similar attitude.
Stress and anxiety may be at play, shifting some once-passionate owners into maintenance mode. If you recognize some of these signs in your own business operation, your mental and emotional health may be suffering. A change may be necessary to preserve your health, and it’s also important to remember the value of your business is primarily based upon recent performance. If changes to your entrepreneurial mindset result in a back slide, your company’s value may be substantially diminished.
The Business Does Just Fine Without You – Startup entrepreneurs obviously play significant roles in the development of their businesses. From conception to launch, and beyond, founders may be the most active stakeholders, keeping commercial ventures headed in the right direction. As companies mature and key slots are filled with competent professionals, owners’ input often becomes less crucial to the success of daily operations.
Reaching a point at which your business functions well without you is desirable for two reasons. Not only does it prove the time may be right for making a move, but it also helps reinforce confidence among potential buyers. Your business is more valuable to them with a strong management team in place. On the contrary, when would-be buyers see your hands in every aspect of your business, they may turn away from the sale, believing you’re indispensable to the ongoing success of the company.
Retirement is on the Horizon – Even the most dedicated business professionals need exit strategies, facilitating retirement. Whether or not family members are slated to take over the next generation of business operations, many owners are without proper plans, outlining a smooth transition. If you’re approaching retirement age, without an established exit plan, it may be time to set things in motion, preparing for your departure from the company
No one knows your operation better than you do, so it’s your job to recognize the right time to step away or sell your business. As difficult as it may be to separate from your cherished startup, waiting too long to move on can limit your options or result in a reduced sale price.