5 Years and Out for an Entrepreneur

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?

3 thoughts on “5 Years and Out for an Entrepreneur

  1. I think this really depends on how confident you are in your ability to take the business to the next level on your own. If you get to 5 years and created a lot of value, imagine how much value you could create in the next 5 years. A great example of this is MailChimp. Even with 360i, we sold the company and did well, but when they wold it again 5 years later the value went up by 10x. I like the concept but am not “sold” on it.

  2. I partly agree with both opinions. I personally enjoy the challenges of starting up companies with new ideas and new directions and feel unless it’s something you are truly passionate about, it can get a little tired after 5 years. But I also enjoy maintaining existing companies profitability and growing it, a lot of the time with a renewed freshness, that a lot of 5 years plus companies need.

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