Creating a business is an incredible process. Founders, CEOs, executives and even staff who get in on the ground floor of a startup put their heart and soul into businesses, which is usually a good thing. However, this means that there are lots of emotions involved. Many founders refer to their startups as their babies and feel a strong tie to the businesses. This feeling is helpful. It is what keeps other team members fired up and it fuels the long days and nights spent at the office fixing problems and making it all happen. However, this emotional connection to the company can also keep CEOs and founders involved in the business past the optimal point to get out. How do you know when it's time to move on and sell the business?
1. You Notice a Change in Mindset
When you are at the beginning of the startup process, you are motivated. You love your business and you might be willing to go far to make it work. You work long hours, make sure you have the most up to date technology, and put all your resources into meeting your goals. However, after a time, your mindset may shift. Many founders get to a point where they would rather coast on prior successes than go full steam ahead. This shift in thinking may be a good turning point for you to consider handing over the reins to someone else.
It's only natural to want to enjoy the fruits of your labor and recover from the amount of time you have spent working over the years. However, a coasting mentality trickles down. It affects how your teams do business, lowers sales, and ultimately, it can lower the overall value of your company.
If you feel like you want to coast, that's normal and totally fine, but if you want to sell in the next three to five years, get someone else in the driver's seat who is more excited about the business than you are at the moment to keep price and morale up.
2. The Ship Sails Without You
At a certain point, you may have done such a good job running your business that it doesn't actually need you anymore. Do your employees remain productive even when you're on vacation? Do you have an amazing management team in place who can handle whatever comes their way? If the answer to these questions is yes, then it may be time to look for a buyer. Startups with prepackaged, fully functioning management teams may have a higher value than ones that need more oversight.
Of course, you can stay on as a mentor or coach, but leave the big decisions to the new company in charge.
3. You Want to Do Something Else
Whether you want to retire or you simply want to shift gears in your career, you should have a plan for what to do with your business before you leave. This is in part because you wouldn't want to waste the value of your business by just letting it die out, but also because you may have teams of people who depend on your company for income. Prepare well in advance for a successful sale and you can move onto the next phase of your life worry-free.
Of course, there are other times that it might be time to move on. Perhaps there are other financial or industry conditions that make a sale particularly valuable at the moment. Preparing for a sale takes a solid plan and a bit of time. Make sure you have both of these elements on your side if you plan to make a change and move on from your startup.