Over the next series of blogs we will interview a variety of business owners, across sectors, to understand motivations and some real thoughts about business owners thoughts on their exits.
Before digging into some of the questions, some early context:
Ronstadt pioneered the early research into ex-entrepreneurs. How, and why, did they exit. He found that very few (5%) had gone bankrupt, perceived ‘failures’, although identifying the possibility that those that had may be less likely to respond, and a greater percentage of ex-entrepreneurs, 89%, had sold or liquidated. Perceived ‘successful’ exits.
As a focal point for existing literature view, the understanding of what happens to facilitate an exit, Ronstadt provides some very early insight into why entrepreneurs exit, themes that we recognise today and create, very much, the focal point for academics understanding exits.
- 31% reported that it was a financial decision alone. Further research might ask why that means, finance creates a means to an end for one journey and the ability to start another. In this instance we could ask was it the size of the offer or was it that the income levels were too small and unsustainable for the life circumstances?
- Over 1 in 5 ex entrepreneurs attributed exit to finance and personal / family reasons, subsequent studies ((M. Bird & Wennberg, 2016; Justo et al., 2015; Koładkiewicz et al., 2022; Sardeshmukh et al., 2021a) all seize the opportunity to look at similar themes of the emotional toil and family strains of entrepreneurship and exits.
- 11% of Ronstadt’s respondents cited family reasons in isolation from finances.
- 1 in 3 entrepreneurs had strong motivations linked to personal and family challenges that created a reason for exit.
So with some foundation understanding on exit, we will be asking the follow questions of our business owners. Let me know if you’re keen to answer your own set of questions. (We know that 70 percent of business owners understand the importance of having an exit, but we also know a tiny proportion of that actually have a plan!)
- I’m setting up a business and I know I want to sell it at or around the 5 year mark. This is the age old adage of would you go into anything else in life without knowing how you get out? A mortgage? A building? An aircraft?
- What do I need to consider at the point of start up to make that exit as simple as it can be?
- Embryonic to exit, what are those factors that contribute to that pathway?
- What are the options other than selling? The why’s and the how’s?
- Any thoughts on how I should work with business partners to ensure we part friends? This is especially significant with family businesses and the ongoing challenges with social identity.
- Where do I go for help?
We start in two weeks, and have a great list of people to speak to. If you want to join us, please put your hand up and ask.
See you in two weeks!