Recently I was talking to a successful entrepreneur who’s started and sold a number of businesses. I asked about any common patterns or takeaways from the years of startups. One of the most interesting insights was around his thoughts on the lifecycle of a startup and the idea of five years and out.
Generally, the idea is that by the fifth year of a startup, it’s often time to sell the business and move on unless it’s in breakout mode and growing fast. Rarely does a startup make it to the fifth year as most go out of business before then, but when it does, if it’s on a slow-and-steady growth path, it’s time to evaluate different options. Here are a few ideas around it:
- Entrepreneur fatigue often starts to set in 5-7 years after starting a venture
- Many startups by the fifth year still aren’t on the hockey stick growth curve
- A successful, profitable startup with modest growth often takes the same amount of effort as working on getting a new idea off the ground
- An alternative to selling the business is turning it over to a management team to run it with more of a focus on profitability and less on growth
Now, the idea is pretty unusual but it has merit in that there’s so much talk on getting a startup off the ground that there’s little discussion on when to move on.
What else? What are your thoughts on five years and out for an entrepreneur?