19 May 2014, 21:49

When will you sell your business?

This is a question that almost every business owner gets asked. Especially if your business is about selling a product.

It bugs me.

I feel like the question makes the presumption that the business goal is the exit. There’s plenty of businesses out there being designed from day-1 as a “build to flip” business. That’s fine, but it’s not how I’d build a company.

What’s my goal? Build strong dependable cash flows.

It leaves all options open:

  • Trade sale.
  • IPO.
  • Keep doing what you’re doing.

I particularly like the third option, one that’s often not available to the ‘built to flip’ business because they usually don’t make enough money to sustain themselves. They usually try to build a technology, or obtain some revenue-rainbow metric like ‘users’ and find a buyer who will value that.

The third option means even if you don’t sell or IPO your business, you can cry yourself to sleep at night and wipe those tears away with the stacks of cash the company is making.

Hope is not a strategy

Strong dependable cash flows gives you the power to choose any path you want. Even if you choose to raise money you come at it from a position of strength if you’re cash flow positive. It means you have all possible cards to play at the poker table of business. That’s a Good Thing.

I’m always at a loss as to why it’s treated as a bad thing in the tech sector.