Building your own startup is a thrilling experience. Though the journey is full of difficulties, the satisfaction of being able to solve a real-world problem makes the efforts totally worth it.
But unluckily setting up a startup is not enough even if it is deemed successful. Everyone associated with the startup has to continue with the grueling task of expanding the business while fending off competition from new and established players.
Startups, as a whole, do not have an escape from this but founders always have a choice. They can decide to part ways from the business whenever they plan to. But how rewarding that decision would be depends a lot on the timing.
How important is timing?
The end goal for every founder is an exit that benefits everybody including the startup itself. It is this final decision that determines the final gains of founders, investors and employees. Failing to identify the right exit time can wipe off thousands or even millions of dollars from stakeholders’ wealth.
As the incharge-in-chief, it boils down to the founders to make sure that the exit is well-timed.
The best time to sell your startup is when you have options. And not when the startup starts to struggle. The exit should always be a strategic decision and not the last resort.
How to know if it’s exit time?
When the startup is at an inflection point
In a startup’s journey, there always comes a time when it requires a huge sum of money to stay in the competition. At this inflection point, startup founders only have two options — either to raise a substantial amount or to sell it to someone who has the resources needed to keep it afloat.
The choice depends on two important questions:
Is it possible to raise the money within the desired time frame?
Will the financing secure the future of the startup for at least a year or so?
It would be futile to raise large funding if the startup would end up desiring for more very soon. Back-to-back fundings do not come easily.
When the perfect situation presents itself
Exit options are always open. Founders should always be on the lookout for the right time.
This can be done through a regular assessment of market conditions and the prevalent opportunities.
Even if your assessment does not favors an exit, there’s no harm in considering an offer if a good one presents itself. If you feel the price offered is the highest the startup can ever attract, it surely deserves serious consideration.
When your company is all grown up
The later years of a startup is not the same as the first few. The excitement ebbs and a monotony starts to set in.
Also the skill set required to manage a company is in many ways different from those needed to set it up.
If a founder is not enjoying this change in scenario, it’s better to leave the startup in able hands and focus on what he/she is best at — setting up a company.
Such a decision will not just benefit the founder but also the stakeholders.
When you’re burned out
Even if you enjoyed managing the startup after setting it up doesn’t means you can do it forever. As humans, we all tend to lose the drive after doing the same thing day after day.
If you have reached a point where the work and commitment no longer appeal to you, it’s better to find a way out. Staying put even when not wanting to can be counter-productive and hurt the interests of investors, co-founders, employees, the business and not to mention you.
It’s not necessary to stick to the plan
When one forms a company, he has a vision of where he wants to go with it. In fact, it’s a good practice to start a company with a dream of taking it to great heights. But the mindset needs to change a bit once the startup is up and running.
The dreams, plans, and strategies need to reflect the current realities after the startup is past the initial stage.
One should always do an honest assessment of the business and the prevailing market condition and adapt the exit plan accordingly.
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