Unfortunately, not every founder ends up in a happy ending scenario. Your company might fall short even before it reaches the IPO stage. If that happens and your startup can’t deliver on its promises, what happens next? If you’re like most founders, you’ll likely feel disappointed and demoralized, at least in the beginning. Resignations are common, as are clashes of egos and clashes of visions. Once you’re ready to face reality, now what?
A New Solution Can Make All the Difference.
The first step is to identify your own emotions and overcome them. By gaining distance from yourself, you can see objectively that you are not your company. You have defined your company's mission, and you can see the vision that led you to start it. The most successful entrepreneurs have shifted their focus from themselves to the value of their products or services.
Uncovering Your Fear of Failure or Success
It is important to understand why you're afraid of selling your business. You may be concerned about money, or you might feel a sense of loss - but what is it? It's best to admit that you're afraid and move forward with a clear mind.
Define Success
Next, define what success looks like for you and your business. To do this, think about how much money you want to make per month, how many employees you want to hire, what kind of office space you want and any other criteria that will make your life easier if they are met through selling your company. If you are unsure of what success means for your business, call a trusted mentor or adviser and discuss this with him or her.
Is This the Right Move for the Company?
It's a mistake to think of selling your company as a single decision. It's really a two-part process: first you decide whether to sell, and then you decide who should buy your company. If you make the first decision correctly but the second one poorly, it can easily lead to disaster.
The most important thing for founders to appreciate is that selling your company is hard work. It requires more skill than founding it did and more discipline too. When you found the company, you could spend your energy on any part of the business that needed attention. Now you have to focus on the sale, because that's what will determine whether or not you are successful as a founder—which is why it matters more than whether or not the business succeeds as a business.
The challenge in selling your company is not just that there are lots of potential buyers and they all want different things. It's also that if you go ahead with the deal, suddenly your interests will be directly opposed to those of everyone else who worked on building the business up to that point, including investors, employees and customers.
Manage Tough Emotions by Building Trust
At its core, a sale is a relationship.
If you're trying to sell your business, your primary goal is to build trust with a buyer. Buyers want to buy from people they can trust and businesses that are honest and straightforward. Therefore, presenting yourself in a trustworthy manner will help to increase buyer confidence.
Telling the truth is the best way to build trust. If you tell the truth, buyers will see you as a credible source of information. Dishonesty can destroy trust. If you lie about your company or its performance, or if you misrepresent it in any other way, you'll be seen as untrustworthy.
You need to be truthful about all aspects of your business: its capabilities, its products, past achievements, present situation, and future potential. The more accurate and detailed your information is, the more likely it is that you'll build trust with buyers.
Don’t Forget to Prioritize Yourself
The process of selling your company is hard enough. Don’t make it harder by forgetting to take care of yourself first.
The sale of a business often provides enormous financial rewards for the founders and early investors, but those rewards can come at a high price. Founders and early investors often have to make sacrifices during the sale process to maximize their return, such as giving up decision-making authority, agreeing to long-term employment agreements and foregoing liquidity for equity in future rounds.
When you are putting all of your energies into maximizing the value of your company, it is easy to forget about your own needs, including:
Your reputation: You might want to postpone or even give up access to the data that you have amassed on your customers; however, if you rely solely on memories from customers or written notes that you keep in a file, you risk jeopardizing your reputation. Also, be careful not to burn bridges with people who will be important in your next venture.
Your finances: During the sale process, you may need to accept lower-than-market salary or compensation terms. If you are also making sacrifices in terms of time and other commitments while running the company, this can put stress on personal finances as well.
If you feel that your company is worth more in the current market and are considering selling it to another party, know that there will be a huge emotional rollercoaster. It is important to keep yourself centered and level-headed so you don’t get caught up in the hype of the sales process. If you can do that, then you might find an easier way to say goodbye to your baby and look forward to what comes next for you.
Go VC is an early seed venture capital firm that invests in a diverse range of young startups in the tech space and beyond. The core mission of Go VC is to build successful investment partnerships that include capital and expert strategy to ensure all investments achieve optimal results.