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?
David Cummings on Startups 
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