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Creating a Business Other Companies Want to Buy Some entrepreneurs are workaholics. They envision themselves working to build their businesses for the rest of their lives. But that's not everybody. Some business owners think in terms of building their baby up for a few years, and then selling it off and sailing to Bimini. Or taking a break and then getting to work on their next business idea.Probably fewer business owners are thinking about selling just now...but a couple of recent news announcements reminded me that though the IPO market may be slumbering, some small businesses are still cashing in by selling to bigger players in their space. Many big corporations still have money--or can borrow money--for acquisitions. Our relevant news: Item one: MySpace paid $20 million for 3-year-old Seattle social music-sharing startup iLike. The iLike team -- CEO Ali Hartovi, president Hadi Partovi and CTO Nat Brown, stays in place. Attractive iLike features? 50 million registered users and the indie-music site garageband.com. (Critics have sniped that this was a distressed exit, as iLike had been valued higher before the downturn, getting $13.3 million from TicketMaster in '06 for just a partial stake. But I say for the current economic scene, still a nice paycheck.) Item two: MSNBC announced it snapped up Chicago-based, 2-year-old news-aggregator startup EveryBlock for an undisclosed sum. But you can bet it was a check with a meaningful number of zeroes in it. Like iLike, EveryBlock will also continue to function independently. EveryBlock hadn't gotten too far with its micro-local news model, which is running in just 15 cities...but its innovative approach was clearly enough to interest a big Internet gun. Having covered both small business and public companies for a lot of years, I'd have to say a lot of the best cashout situations for business owners are merger and acquisition deals. Some even include getting to stay on at the helm of your company, albeit as a division of a bigger firm. Where with an IPO you get lots of new owners, an M&A deal usually just gives you one. Can be less oppressive. And avoids the public scrutiny of an IPO. The food for thought here is, what are you building that might be of value to a major player in your sector? How are you differentiating what you do? If you wanted to quit your business, who could you sell it to? Take a minute to think about the big companies in your space. Are you developing or delivering something unique that they might want? Would you be interested in selling it to them? Or is there maybe a local competitor you could join forces with to better reach your market? In times like these, innovation is in demand. Prioritize accordingly.
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| Posted under: Growing Your Business, Ideas, Money, Online Biz, Small Biz News, Startup, Success Stories
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Great review and study. I know some people who have done this type of business, start small then sell or have investors come in to become big.
Nice story and truly inspiring especially for someone like me who plan to enter the business world.
Great short article that gets to the point. I've built and sold a few businesses in y 30 years as an entreprneur. All were started with the endin mind. What inspires me to do this? I buy and restore and customize classic cars for fun, profit, therapy and they have becoe a learning process for life and business. When I buy a vehicle, say a 1969 Camaro, the money is made the day it is bought. I look it over, figure costs to build it, what will be outsourced and costs there, and what I can do on my end to get it done, then I think about who will be interested in buying it and for how much. Of course, in the end your the vehicle or business is only worth what the buyer is willing to pay. The type of car I buy , it's rarity, provenance if any, desireability, or what the hot trend is at the moment, often determines what you'll get when it's time to sell. Most of this works the same in business. Restoring a vehicle can take anywhere from a year to five years depending on what needs to be done. A business built from scratch takes about as long to establish as a msellable vehicle and will determine if it is worth anything. When you start any business with the intention of selling out, look at it objectively before starting and on down the line. Because when a potential buyer looks at it, if it don't smoke the tires and light his fires, you'll be stuck with a dud.
That's what it's about being a visionary being
able to see an oppurtunity even when times are a
bit turbulent,for myself I do internet marketing
to supplement my income this a is excellent article for all business owners and entrepreneur
also this is a link I would like to refer business
owners to:
http://spn.marketersmanifesto.com/
I really enjoyed your article, Carol. I am preparing to start an ebusiness of my own and I am glad to have your advice ahead of time! I've been reading various books and many point to this site, Entrepreneur.com. I think it is one of the best sites around. It gives newbies and business vets a chance to hear what people like yourself have to say and covers all aspects of starting and maintaining a business. I just did a post about an entrepreneur, Rachel Ashwell from Shabby Chic, on my site: www.naturallyshelly.blogspot.com. She is a very inspiring person. Thanks again for sharing your knowledge.
Carol
Your insights on business M/A hit home. In these testing times all options need to be explored.
Building and selling a business is also a timing isssue ,as per when is the time right.
After receiving a major legal set back, sometimes it is hard to get back up and continue foward, but it is the faith in ones business that is the motivation to move on.
Thanks for sharing information , and more so the faith that keeps ones dreams alive.
Ed Honesto
Thanks for the insightful post, Carol.
In my own perspective, with the economic downturn we are experiencing nowadays, the thought of closing shop and selling to another business player is not too far-fetched in the minds of tenderfoot or veteran entrepreneurs.
However, I would just like to emphasize that what makes a business venture firmly stand up to economic challenges is faith -- faith in yourself and faith in your business.
Those guys during in the Depression did it, so why can't we?