I have been wondering how to get so many people in love with my business they fight over who should help me transition to the next step. Then I want the press to follow my every move and write editorials on who did a great job or who to let go.
Oh. Wait a minute. I think that's called a publicly held business. No thanks.
On Your Business this morning on MSNBC a company made an elevator pitch to two potential investors. It was a pretty neat product actually - jeans with customizable, removeable pockets - and the partners were looking for $850,000 in working capital. They clearly had no problem with investors taking a stake in their company although most VCs usually want to run it too. They expect to get big fast and provide a 40% ROI.
The feature story company had taken sixteen years to go from $16,000 in sales (today's value $24,387) to $1,000,000. These owners had spurned debt or investors and grew their graphics art company by reinvesting profits into licensing bedding designs.
Which is the right way?
The first company has already figured out its exit strategy. They will get VC investment, the company will probably grow exponentially and then it will be sold or taken public. Either way the owners will make big money but probably lose control of their company. A completely different skill set is necessary then and sometimes it just gets ugly when a founder won't let go. Just ask Jerry Yang of Yahoo!
The second company's owners are in it for life. Their products are more and more desireable. They are debt-free and have no partners. They could have reached the same dollars (without the expenses) but simply putting $1273.23 in the bank every month for the last sixteen years assuming an average 5% interest rate. So it's a lifestyle choice.
I cannot say what is better for others. And amazingly I have changed my mind. I don't want to be in my business for life. I would love to sell to someone who could take it to the next level. Plus I would get all the transition team I could ever want. Besides, I don't want to be one of those people who can't let go as if they will never have another great idea.
What sounds good to you?
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