How do nascent entrepreneurs start to think about exit from the outset?
When we think about exit we usual think about exit happening after a period of time, start and scale up. A process that follows a period of some kind of consolidation, settling or, perhaps less likely, an early pitch or proactive approach for the business.
Juita-Elena Yusuf’s paper of 2012 (there aren’t reams of journals on this subject, a recent search string has identified under 100 academic journals discussing exits) addresses this through two questions: (1) is disengagement a negative outcome? and (2) are all cases of disengagement homogeneous? The question explores the exit as an approach of two paths, as numbered above.
Question one reminds us of the continued question that entrepreneur academics ask, that question being ‘is entrepreneurial inertia a bad thing?’. Or actually, like disengagement, is there a balance? We could also perceive that disengagement has a balance, in effect question 2. The balance being between process, the how to disengage, but also a why, a psychological and emotional detachment. We could then also ask the question of ‘does emotional detachment create the opportunity to not become emotionally hijacked?’. Considering the ‘parental ownership’ model of a business does it therefore become more asset based transactional and it might be hypothesised, more rational in decision making.
Of course this isn’t stating that you could be less caring about success measures through disengagement, but it is suggesting there may be further research needed to understand these two disengagement processes.
It may open further questions to the concept of a serial entrepreneur. Without questioning the concept of whether such a thing exists, a serial entrepreneur, would disengagement from start-up create more mental bandwidth to launch, and run, a number of ventures in the journey towards exit. Very few entrepreneurs run just one venture, and very few have the bandwidth to be actively involved in all of their ventures. The concept of conception and immediately putting the venture up for adoption would certainly create a platform for a number of ventures to run simultaneously. Perhaps also diversifying risk to ensure maximum opportunity from seed to sale is the status quo.
And repeat infinitum.
But, Aldrich (1999, Organisations Evolving), discusses that only about half of nascent entrepreneurs succeed in establishing an operating firm and many fail to see the light of day. Aldrich also goes on to say, “the founding process appears complex, chaotic and compressed in time”. With that being considered it potentially makes the concept of serial entrepreneurship even more tough. Unless you have a team of supporters that help facilitate every step of the growth cycle. That may be possible on a third or fourth occasion, but a primary concept for start-up less so, perhaps giving way and succumbing to the many of start-ups that fail.
Naturally, as none of the steps to business success are isolated, nor prescriptive, conforming and identical, we must understand the motivation to exit which would normally precede the motivation to start up. Which of course is the reverse of the start, and scale up, process.
It remains a complex puzzle.