Every Founder Plans for Growth, But Almost None Plan for the Exit. Here’s What I Wish I’d Understood Sooner.

There are moments successful each entrepreneur’s life that look imperishable while you’re surviving them. You person yourself you’ve yet crossed immoderate invisible decorativeness statement — that each the years of uncertainty, sleepless nights and wondering whether payroll would clear person yet fixed measurement to thing durable. For me, that infinitesimal arrived during Covid.

The world had changed almost overnight, and truthful had our business. Real property agents abruptly couldn’t meet clients successful person, clasp unfastened houses aliases walk their weekends driving buyers from 1 spot to another. Almost overnight, the work we had spent years building became 1 of the safest and astir effective ways for agents to proceed increasing their businesses.

Demand exploded. We were opening offices faster than I ever imagined possible. Money was coming successful faster than we could deploy it. Investors wanted to invest. Employees wanted to join. It felt for illustration each determination we made worked.

When you’re successful a play for illustration that, it’s difficult to ideate it ever ending. I surely didn’t.

The early I was betting on

People occasionally approached america astir buying the company, and I hardly entertained the conversations. Looking back, immoderate of those offers were extraordinary. At the time, they didn’t consciousness bonzer astatine each because I wasn’t comparing them to what the business was worth. I was comparing them to what I believed it would yet become.

That’s an important distinction.

I wasn’t building a institution to sell. I was building thing I genuinely believed my children mightiness 1 time inherit. Maybe moreover my grandchildren aft them. I had fallen into the aforesaid trap I now spot truthful galore founders autumn into: I assumed my business would beryllium 1 of the uncommon exceptions that would past generation aft generation. History says very fewer companies really do, but entrepreneurs don’t build companies by reasoning statistically. We build them by believing our communicative will beryllium different.

Mine wasn’t.

As the world slow returned to normal, thing changed that I didn’t afloat admit astatine first. Nothing collapsed overnight. Revenue didn’t abruptly disappear. We still had customers. We still had talented people. We still had investors who believed successful america capable to proceed putting money into the business.

From the inside, it ne'er felt for illustration we were opinionated connected the separator of a cliff. It felt much for illustration we were driving into a headwind that would yet pass. The problem was that the marketplace had changed successful ways we couldn’t simply outwork.

During Covid, we weren’t conscionable a bully solution. In galore ways, we were the solution. We helped real property professionals make leads, find buyers and proceed trading homes without putting themselves aliases their clients astatine risk. Once the world reopened, that advantage slow disappeared. We weren’t solving the aforesaid urgent problem anymore, yet we were still operating the institution that had been built for that bonzer infinitesimal successful history.

Like galore founders, I responded the only measurement I knew how. Grow. Launch thing new. Hire much people. Build much technology. Open different office. Keep moving.

Entrepreneurs are conditioned to judge that maturation solves almost each problem. Most of the clip that’s true. This clip it wasn’t.

When maturation stops creating value

What I didn’t understand past — but understand wholly now — is that location comes a constituent erstwhile maturation stops creating value and starts disguising problems. Every caller inaugural gave maine different logic to judge the turnaround was conscionable astir the corner. Every information of backing reinforced that belief. Investors continued supporting the institution because they believed, arsenic I did, that we could navigate the transition.

Investor assurance tin beryllium intoxicating. It tin besides beryllium misleading.

I yet learned that investors and buyers measure businesses done wholly different lenses. Investors had spent years getting to cognize us. They knew our activity team, understood our strategy and believed we could execute it. Buyers don’t person that luxury. Buyers don’t attraction really difficult the travel has been aliases really galore obstacles you’ve already overcome. They aren’t buying your past. They’re deciding whether your early is much charismatic than each different opportunity competing for their capital.

By the clip I genuinely understood that difference, the speech had already changed. The offers stopped reflecting wherever the institution had been and started reflecting wherever buyers believed it was going.

I tin still retrieve realizing that the business could perfectly go successful again. I believed that then, and I still judge it now. But getting location would person required dismantling overmuch of what we had built, rebuilding our technology, restructuring the statement and spending respective years increasing slow pinch small aliases nary profit.

In different words, we weren’t really moving an established institution anymore. We were preparing to go a startup again. Years earlier, I would person embraced that situation without hesitation. This time, I couldn’t.

The instruction that changed really I build

Eventually, location was a gathering that each laminitis hopes ne'er happens. Not because the institution had failed, but because everyone successful the room had reached the aforesaid conclusion astatine the aforesaid time. We nary longer wanted to walk years rebuilding what we had already built erstwhile before. We weren’t walking away because it was impossible. We were stepping distant because we had reached the extremity of the travel we wanted to take.

Looking back, I don’t regret building that company. I don’t regret believing successful it. What I regret is believing location would ever beryllium much time.

I assumed that arsenic agelong arsenic the business remained profitable — aliases astatine slightest tin of becoming profitable again — its worth would yet recover. I couldn’t person been much wrong. Value isn’t wished by really optimistic the laminitis feels. It’s wished by really overmuch assurance personification other has successful the roadworthy ahead.

That instruction changed the measurement I’ve approached each business since.

I’ve now bought and sold dozens of companies, and I person ne'er repeated that mistake. I still build pinch ambition. I still judge successful semipermanent growth. But I besides understand that each company, nary matter really successful it becomes, is apt headed toward 1 of 3 outcomes: It will beryllium sold, it will adjacent aliases personification other will yet inherit the work of deciding its future.

That’s why each laminitis needs an exit strategy agelong earlier they deliberation they’ll ever request one. Not because you scheme to sell. Because 1 time you’ll person the opportunity to — and the marketplace won’t attraction whether you’re emotionally ready.

The hardest instruction I ever learned successful business is besides the simplest: The champion clip to waste a institution is usually the infinitesimal erstwhile trading feels wholly unnecessary.