Guy Rigby, Head of Entrepreneurs at Smith & Williamson urges founders to consider the options before selling their stake in future growth

It’s not like it used to be, writes Guy Rigby. Building a business used to be a long-term, even lifetime, pursuit. One small step followed another to create long-term value and success, with jobs for life for owners and managers. Contrast this with many of today’s businesses, designed and built with a sale in mind; a world in which ‘exiteering’ is often preached from the outset but which, in practice, is rarely achieved.

From time-to-time, an idea or invention is so revolutionary, so disruptive or considered so critical by an acquirer that it’s sold in its formative stages, before it has been proved or disproved, or before it reaches maturity. In most cases, however, businesses that have value will have earned it through painstaking development, turning vision into reality and achieving scale and profitability through a combination of products, people and processes. Focus, innovation and, above all, strong management will typically be the drivers of this success. So, apart from the shortened timescale, perhaps it’s not so different from the old days.

But how do you build a valuable business? Clearly, you’ll need the right vision and strategy, along with demand for your products and services. But that’s not all. The biggest reason that businesses fall short is because they fail to break through the glass ceiling of owner dependency – the limiting factor that most effectively prevents the creation of value – where the hero/ founder is unable to adapt to become a strategist/ leader. You’ve heard it all before, but entrepreneurs need to learn to work on the business, rather than in the business.

The journey from entrepreneur to leader, involving the professionalisation and scaling of a business, is no mean challenge. If you get it right, you will be one of the talented and lucky few (yes – it takes both!) who manage to build a sustainable, profitable and valuable business, providing a range of options and choices. Before you rush for the exit, consider some of the alternatives:

•Stay as you are. Why sell the best business you’ll ever own? Where else could you get the kind of returns that you get from your business? Why not focus your role and carry on?

•Keep it in the family. If you’ve got a family and they work in, or want to work in the business, why not help them take it over? Consider engineering a family buy-out, raising external debt and allowing part of the purchase price to remain as an interest bearing loan, repayable over time.

•Partial sale. Why not cash in some, but not all, of your chips, selling a stake to a private equity house (or similar), whilst getting additional cash for expansion? You could get some cash and mitigate your risk, whilst participating in the future upside.

If, having considered the options, you favour selling your business, ask yourself one final question. What will life be like after the sale and what will you do? Most entrepreneurs, even older ones, are restless, driven characters. Perhaps you’ll retire to enjoy the well-earned fruits of your labour or, then again, perhaps you’ll be back!

Guy Rigby is the Head of Entrepreneurs at Smith & Williamson - the accountancy and investment management group – and Shortlist Panel Judge for the Entrepreneur of the Year award. He is also the author of the critically acclaimed book, ‘From Vision to Exit – The Entrepreneur’s Guide to Building and Selling a Business’, available on Amazon and in good bookshops now.