entrepreneurial life cycle

picture yourself in a darkened theater preparing to see the preview of a new play about the life cycle of a fictional family business. The playwrights and producers are the entrepreneurs who founded the company and their employees are the actors. The play consists of four acts with an encore. This play takes place in a suburb of Milwaukee.

act one: A husband and wife are sitting at the kitchen table discussing the possibility of starting their own business. They are imagining who their customers would be and how they would cultivate these relationships. They know they are taking a risk by resigning from their current positions and venturing into the unknown. They decide to take the leap and the entrepreneurial stage of the company’s life cycle begins.

act two: As they enter the growth stage, the husband and wife begin to promote their business to potential customers. They acquire small business books, and as the volume grows, they begin to acquire offices and hire their first employees. Year after year its turnover grows and so does its workforce. They begin to upgrade their staff to take on larger, more involved projects. As their staff and business grow, they require more capital and build ongoing relationships with local financial institutions. It soon becomes obvious that they need a business plan and they hire a consultant to help develop and implement it.

Third Act: The business quickly enters the stage of rapid growth. The need for team leaders and a more formal structure becomes obvious. A leadership team is formed and job descriptions are formalized. The business soon grows out of its existing space and a larger facility is purchased to accommodate additional equipment and employees. The roles of each employee become more defined as teams handle more projects. Several new employees are added to meet the demands of the additional business. The husband and wife now take on the roles of president and CEO and become the face of the business. Their reputation in the larger business community grows as they take on larger and more complex projects.

Fourth Act: As the business begins to enter the maturity stage and the rate of growth slows, the founders begin to consider the next step. It has been more than 30 years since they started the business and they want to reap the benefits of their work. They begin to consider a number of possible exit strategies. They could sell the business to a competitor or a member of their management team. His desire is to keep the entity intact, while rewarding long-term employees for their loyalty. After much soul searching, they decide to sell a senior member of their management team.

Bis: The owners agree to stay for a period of time so that the business relationships that have been cultivated over the years remain intact during the transition of ownership. The business is now run by the new management team, with the previous owners acting as mentors and advisors.

So what is the purpose of this dramatization? It is to illustrate the importance of having a carefully thought out exit strategy for your private company.

It’s also critical that you involve experts in your planning, such as attorneys, financial planners, and a firm that specializes in acquiring potential candidates for your business. You want to develop options that are better for your team and your employees. This planning should not be last minute, but should have been developed over a long period of time. His goal is to achieve the maximum reward for his years of work and dedication, and when the final curtain comes down, it’s a standing ovation.

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