Are you preparing your startup for an exit?
2019 has been the year of exits in the Middle East, with Careem’s acquisition, and Fawry and Network International’s IPO becoming the biggest news.
According to a new report, almost 60 percent of startup founders in the MENA region expect to exit in the coming 5 years.
However, an exit doesn’t necessarily mean that the founder leaves the company. While acquisitions, mergers and IPOs are certainly the popular strategies, founders can also sell their share to their co-founders, to a new entrepreneur or a team wanting to take over the business.
In either case, with that goal in mind, startups founders need to formulate a business strategy to reach their highest evaluation and exit well.
Following are some aspects you can consider incorporating in your exit plan:
Success and profitability
Following the recent cases of SoftBank’s portfolio companies depreciating in value and struggling to make a profit, it should come as a no-brainer that your startup needs to become financially sustainable and profitable as soon as possible.
There are multiple ways in which you can build value, the easiest is scaling and building a strong team. This increases your brand’s equity, which you can leverage when selling your company or your shares to another.
Also, don’t forget about PR and branding. The more visibility you have in the media, the more people know you, and you can build respect and your brand without even meeting people.
However, networking is a big part of building your brand. People need to know the entrepreneurs behind brands. They are sold on your passion and ideas. Make a positive impression on people and they’ll connect you and talk you up to those outside your network, effectively increasing your connections.
Organise data and keep records
Whether it is for an IPO or acquisition, and even if you’re not planning an exit, it always pays to keep your business data, including growth and accounting numbers, properly organised as early as possible. Investors as well as potential buyers will want to see those records, or have them on file long after you’ve exited.
Having your paperwork organised can also help you in winning over their trust during casual meetings before the idea of an exit has even come about.
While external financing from investors is a lucrative option, being able scale and profit on your own will help you in not being reliant on external parties.
Every entrepreneur has a vision for their business. If your vision is to grow you company till it can sustain by itself and then divert your attention elsewhere, or even if you want to keep scaling up, acquire other companies and become the next business giant in your industry, having a plan towards achieving those goals is important.
Even if you do not know whether you’ll ever want to sell your company, the above strategies will also help you scale. After all, they’re there to increase the value of your company and yourself and an entrepreneur; and whether you put a timeline to it or just let it keep growing, is your decision.