The dangers to be too attached to your company | Entrepreneur

When I grew up, my parents were in the hotel business. In fact, they had three hotels at some point. My father died when I was quite young and my mother continued to serve the hotels. She did well, but she soon realized that the three hotels were too much for her, so she sold two of them.

She started investing heavily in the remaining hotel. She expanded the dining room and introduced ‘sizzling steaks’, which at the time were a huge hit. It has completely renovated the “tap” room and introduced entertainment for customers daily. People were enthusiastic about what a great businesswoman my mother was! However, my mother never spoke to me. She kept everything close to the vest and I never appreciated what she had done. But again, I didn’t really care. I was too busy with sports and haunting girls!

Related: 7 things I wanted me to know I had known before I started a business

The second generation

It didn’t seem like the second generation would play a role in this company. My sisters married and moved away. My brother became a lawyer and moved to Boston, and I decided to become an electrical engineer because they received the highest salary after graduation (no good reason to become an engineer, as you will see). Somewhere between my second and junior years I got the urge to become an entrepreneur.

After some research, I contacted a tailor in Hong Kong and chased the import of some of their famous suits. I never implemented it because in the final analysis I could not imagine that I measure the insam of a man! In my last year I started to think seriously about my mother’s hotel. One day I returned from the lessons and I heard that the hotel had burned down. So far the hotel company!

My uncle as my mentor

My mother’s brother, Uncle Ken, had a very successful paper distribution company. My mother even told me that in 1959 he received $ 14 million for his company. It was always a big event when Uncle Ken came to visit. He would put in his Cadillac and I would wear his bags into the house. He would always give me $ 5, and that was a lot of money at the time.

When I graduated and moved to Boston, I decided that I needed a business mentor if I ever followed my own company. My father died when I was young, and my mother never spoke to me – so uncle Ken was the answer. I called him and we started eating the month or so, and I would ask him with questions about the business world.

One evening I met him at his office and he asked me to wait while he had ended a meeting. The office walls did not go all the way to the ceiling and I could hear their conversation. They seemed to talk about buying the company from my uncle. I heard one of the men say: “Your company is only worth your equipment and we appreciate that for $ 250,000.” I thought: “Wait a minute, it is 1969 and 10 years ago the company was worth $ 14 million – and now it is only worth $ 250,000!”

Related: what about selling your company

The collection meals

This is a true story. As they say, “I can’t come up with this!” My uncle fell in love with his company. It became his “baby”, and he couldn’t give up his “baby” – with disastrous results. That five -minute “fragment” had a major impact on my corporate philosophy. But most business founders treat their companies as their “babies” and keep them far too long. Just like everything else, companies have a life cycle.

The business life cycle

Let’s talk about the classical life cycle of a company. The number of years is highly dependent on the specific industry. In a rapidly changing industry such as High Technology, the time from start-up to decay can take a few years, while a slowly changing industry such as insurance can take a few years.

Each company comes to a level (plateau) where they require a capital infusion to come to the next level. This usually happens between $ 5 and $ 10 million in income. The company may need new management, since the business owner may not have the right management expertise and the company may need a CFO to cope with the financial growth requirements strategically. The company will have to increase marketing efforts and hire more competent sellers. The company may have to open regional offices to tap new markets. The company needs more space to accommodate the increased support and administrative staff.

Just before the peak of the bell -shaped Kromme, where business growth is delayed (but still growing), a decision must be made about how to implement a new growth disease to come to the next level. If the owner has the assets, the energy and motivation, she/she can find the capital, either by debts or equity, to finance a new growth. If the owner does not have the option, energy and motivation, he will hopefully have enabled the company to find the ‘right buyer’.

Related: Study shows that entrepreneurs really love their companies like their children

If the owner waits until the growth of the company starts to fall, it is not only more difficult to find the ‘right buyer’, but also more difficult to acquire the funds for organic growth. I can only imagine what my uncle would have realized from the sale of his company if he had followed this strategy and had not treated his company as his ‘baby’.

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