Life After an Exit: How do Entrepreneurs Transition to the Next Stage? (3 of a 4 Part Series)
The first two parts of this series addressed preparing to sell your business, deciding to sell your business, and then the first year after the sale. Now, it's time to look at planting some new seeds. If you haven't read the 1st two parts, you can access them at http://archive.constantcontact.com/fs059/1109765653369/archive/1110445097983.html.
So you've sold your business and spent some time over the first year reflecting on your past business, the relationships, and what once was. You've taken some vacations, done some projects around the house, drove your spouse and other family members a little crazy, and now you are ready to do something new.
By nature, entrepreneurs must always be learning and doing something. I have yet to see one that plans for a long-term life of leisure, regardless of their age. So, what is that next thing? Typically, you begin experimenting in a new committed activity. These activities usually are not the ones that end up having your continued major involvement; however, they are experiments that lead to new learnings. They also may be activities that are continued in the background as a new chapter begins. These experiments may include activities in the arts, government, teaching, mentoring, non-profit and for-profit boards, and returning to old interests or learning something new.
Starting another company and doing angel investing, also seem to be logical next steps for many. Entrepreneurs quickly find themselves investing in other people's companies. Many, however, eventually find more financial and psychological fulfillment by focusing on areas of interest. Focusing on what you know, limiting the size and number of these kinds of investments, and giving the time and wisdom to those ventures will help to fill an emotional gap by engaging more fully.
On the other hand, many entrepreneurs dream of building another company. However, often entrepreneurs are not aware of why they were successful. Some are out of touch with their unique strengths. Because they cannot see their strength, they cannot leverage it. Others are glaringly overconfident, think they are geniuses for making their money, and do not recognize the role luck had in the creation of their success. Repeatable entrepreneurial success requires an understanding of one's skills and talents. A repeatable business model also is a theme to successful serial entrepreneurship. In fact, it is common for entrepreneurs to fail in a second business as they test new interests and may not understand their true skills and talents. They are more likely to succeed again in their third or fourth venture.
At this stage, you've identified whether you have enough personal wealth, or if you need to look at other opportunities. If you have enough personal wealth, you've set aside some "fun" money to look at other investment opportunities. The most challenging aspect now is that the returns you were potentially making in your own company are difficult to find outside of your own or another private company investment. Many entrepreneurs make the mistake of investing in too many and too risky companies. Over time, they learned to be more focused and to invest only in deals they understood. They also learned that preserving their wealth was their highest priority.
The lessons learned in this phase are to understand what skills and talents you have that got you your initial success. If you plan to start anew, be sure that you truly understand your own strengths and how to leverage them, as well as understand the business model that can be repeated for future success.
"Opportunists seek for a chance. Entrepreneurs make new chances."
-Toba Beta My Ancestor Was an Ancient Astronaut
What's your new chance?
Lange Entrepreneurship Center, Eugene . "White Paper 03. Life After an Exit: How Entrepreneurs Transition to the Next Stage." Credit Suisse 1 (2013): 32. Print.
Jayne McQuillan, CPA, MBA, CEPA is a strategic management consultant, and the owner of Journey Consulting, LLC, in Green Bay