Don't focus on an eventual sale. Instead, make sure you get these fundamentals right.
Many aspiring entrepreneurs I know want to build a successful company with the intention of selling and exiting the business when the time is right. But building a successful start-up, and then knowing when and how to exit, can be tough for even the most seasoned entrepreneurs.
I recently had the opportunity to speak with Malcolm Cowley on the subject. Cowley helped found affiliate marketing network Buy.at, which AOL acquired in 2008 for $125 million and has since rebranded as Affiliate Window. After successfully exiting his first company, he and his team launched another successful marketing platform, Performance Horizon Group. Needless to say, Cowley has a lot of insight to share about building and exiting a start-up. Here are some of his tips:
1. Focus on building a successful business, not an exitable one.
Don't get so caught up in the exit that you forget about the fundamentals of a successful business. Build the kind of business in which a Warren Buffet might invest. You need great opportunities for scale and growth, a good revenue line, continuous growth at a good rate, and you need to be the market leader. Stay focused on these elements and your company will be more attractive when you are finally ready to exit.
2. Know your market.
Market leaders know where their markets are moving and where they can have the biggest impact. Sound like your company? If not, that's your goal. Never stop learning about your industry--and the industries that affect your industry. Also, keep in mind what bigger businesses like Adobe, Microsoft, Google, etc. are buying and how your company fits into what they look for.
3. Assemble a strong team.
A stable of experienced, high-level executives builds your credibility. Plus, when you attract top executives in your field it shows that you have an exciting company, which ultimately may bring you closer to an exit. Cowley said that without his strong team at Buy.at, AOL might not have even spotted the company.
4. Customer service matters.
When building Buy.at, Cowley and his team noticed that many competitors were focusing too much on the product itself and not going the extra mile for the customer. Thus, he did the exact opposite and made sure his company over-delivered on service. Again, take your eyes off the exit. What matters first is making sure your customers love your business.
When you want to exit your company eventually, there's no substitute for solid business fundamentals. Get those right and you'll be well on your way.
ILYA POZIN is the founder of Open Me, a social greeting card company. He founded his first company, Ciplex, a digital marketing and creative agency catering to small businesses and start-ups, at age 17. @ilyaNeverSleeps