Business Article

How Evolved Is Your Business?
(The Seven Stages of a Business)

By Pam Butterfield

Stage Six: Scanning the Horizon

The “Horizon” Stage is about the original founder or founders wanting to tackle new challenges and/or cash out their investment.

Founder’s mindset: Fatigue, boredom, and restlessness often afflict the founder(s) in this stage.

Management practices: Management systems are fully developed by this point. But the founder’s attention turns to selling the business. In this regard, the founder must work with appropriate legal and financial resources to make good decisions. If the founder does leave, the company must address issues relating to leadership succession.

Planning mechanisms: Given the founder’s interest in new horizons, the firm should develop a succession plan before the founder begins to transition out of the business. A transition team (CPA, financial planner, attorney, coach, possibly consultants) should also be formed.

Financial considerations: Detailed financial information is essential and must be clearly understood in order to support a change in ownership.

Products and services: The product line is mature and performing well. But now the issue becomes will a potential buyer view these products as marketable? And can they continue to be sold without the founder’s involvement?

Key challenges at the boundary: To move to the next Stage, it’s crucial to be brutally honest about the value of one’s “baby” to someone else, especially if much of the business’s success depends on the founder’s involvement.

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