‘Run from the lion’ OR ‘Chase the naked lady’

Serial entrepreneur Mike Doernberg used this saying in a business owners workshop and it has always stuck with me.  In particular, he used this phrase as it relates to start-up business owners who have reached a point of no return and are about to “cross the chasm”.  Either sell your business (run from the lion) at this juncture, or bear down for the next 3-5 years to really refine & develop the business (chase the naked lady).

Now, this catchy phrase should be at the top of every business owners’ mind (not just start-ups) as we enter what analysts project to be a tumultuous next couple of years.  Rob Slee, investment banking guru, paints a very grim future for today’s business owner based on 10-year, US economic cycles over the past few decades:

• “Owners are currently faced with an adult decision:  to either get strategic about their businesses or to get out as soon as possible.”
• “A further challenge to owners is the uncertain US economy.  Actually the economy tipped to the dark side toward the end of 2007.”
• “…..private equity and hedge funds also have had too much money for their own good.  These classes, which represent trillions of dollars, will be reset over the next 3-4 years, making the sub-prime thing seem like a drop in the bucket.”
• “…..business owners have until the 2^nd quarter of 2008 to sell out, or they will need to hold their companies until 2015 or so before they can maximize a sale.  Yikes!”
• “You still have a few months to sell-out before the nasty economic front settles in.  We’re about to face capitalism at its coldest.”

No one can foretell the future, but Rob Slee uses historical trends of economic trends to validate his points.  With the US still recovering from the sub-prime crisis, being locked in to a nasty war, and trying to determine who will become the next President, business owners are at more risk in possibly declining SMB valuations and opportunities to sell their business.

Our recommendation:  Run from the lion and sell your business (if you’ve been debating this over the past couple of years).

For additional insight and to add to this discussion, please read our article on Baby Boomer Business Owners flooding the marketplace with “for sale” companies.