I’ll get right to the point – when it comes to deciding between building your company to sell or setting it up to operate as a lifestyle company… you don’t have to choose. If you build it like you intend on running it forever, it’ll attract and look great to prospective buyers.
Here are 5 important principles a founder should adopt in achieving either of these objectives:
1. Leave your ego at the door
Its not about you. It can’t be — unless your reason for owning a company is to make yourself feel important.
Your objective is to get yourself out of the way and make the company valuable without you. The alternative ? Everywhere you go, your cell phone will be ringing off the hook because you’re on every critical path. Prospective buyers of your company don’t want a single point of failure (you!). Does the prospect of making yourself dispensable scare you ? Don’t let it. You will be surprised at the hidden benefits and opportunities this opens up — but you must have faith in this concept. Lead by example, build and fine-tune processes, automate like crazy, hire/train/mentor fantastic people, repeat.
2. Acquire complementary skills
Get out of the echo chamber.
We tend to think our strengths are the most important skills to have, and subconsciously seek them in prospective business partners or employees. However, doing so will not help you address your weak spots. Be honest with yourself about what you lack and what you need, and seek those attributes in others as you are building your organization. Great with tech but uncomfortable in sales situations? Team up with folks with strong sales or business development backgrounds to round out your organization’s skill set.
3. Brand is key
Don’t skimp when it comes to making sure your brand is one you can build upon and your team will rally around.
Get a pro to help you with your logo and colors, and then apply liberally. Rent or hire a social media expert with graphic design skills – there are lots of millennials out there that are naturals at it. Make sure every web page, screen shot, or other piece of marketing collateral the public will see has been reviewed with an eye towards UI/UX. Then do PR, social media, reputation marketing, SEO, and pay-per-click advertising to get your brand out there.
4. Protect yourself
If you have disagreements with your co-founders, employees, vendors, or your customers, you’ll be glad that you have things in writing.
Legalzoom is great for basic stuff, for example confidentiality agreements — and can save you a lot of $, especially in the early days if you are bootstrapping. But be sure to establish a relationship with good accounting and legal firms for the important stuff. ie. shareholder agreements, and especially if you enter into talks about an acquisition in which case there will be term sheets, letters of intent, and a myriad of other legal documents to review and sign. Also, get an HR manual in place, have your employees review and sign it, and keep it updated.
Be sure to keep fully executed copies of every contract you’ve entered into on file, as during the due diligence process these will all need to be produced.
5. Have patience
Things always take longer than expected. With limited operating history, revenue projections are an exercise in creative writing. Any recurring costs you’ve committed to (payroll, office space, computing resources) will add up quickly so be conservative. Payroll processing, bookkeeping, IT support, marketing, SEO – learn as much as you can and get your hands dirty. You’ll learn a ton in the process, reduce your expenses, and be in a better position to delegate / manage them once the job gets too big or you get too busy.
Bootstrapping a company is like building your own home — done with diligence and exceptional care. Following these principles will make it attractive for acquisition as well as to keep and operate long-term.