At the Black Enterprise Entrepreneurs Conference, sponsored by Nationwide, attendees got the chance to gain key insights on expanding their businesses. Guests David Tarver, CEO of eBuktu Media L.L.C, Clarence Wooten, founder of Progress.ly, and Russell Wright, chairman of Sentel Corp, shared advice on how to assemble the proper team and infrastructure to build value into your business.
One vital aspect of business growth is strategy, and when it comes to scaling up, business owners who know what steps to take and when to take them are often ahead of the pack. Check out five quick tips, shared during the chat moderated by Black Enterprise’s Chief Content Officer Alfred Edmond Jr., on how you can position your business for a successful transition:
1. Know the value of what your company represents and to whom. Understanding why your company is the best for what you offer is key. You can then determine where you stand in the market and your end goals.
“Think forward to the future, but enjoy the journey while you’re on it,” Wooten said. “Start thinking of [your] exit as soon as you think of entering,” he added.
2. Determine your strategy for talent acquisition and transitioning from old to new throughout prospective stages for growth. “[Ask yourself,] ‘Is this the person to take you to the next level?'” Wright said. Wooten added that scale is important in terms of talent, and reevaluating the added value is key in planning for expansion. “That can include [even replacing] yourself as CEO,” Wooten explained.
Transitioning through talent during your phases of growth may not always be easy, Tarver said. “[In replacing talent], you see time after time those types of relationships can fail [when new talent] doesn’t fit the culture of your company,” he said. Be sure that you know your brand, your company’s mission and culture, and transition talent accordingly.
3. Create an ideal business structure and agreements with founders that accommodate end goals. It’s vital to know how to work with co-founders or those involved in the formation of the company in terms of equity structure. One must find the proper balance in agreements on who earns what based on value added and stage of business growth. You have to look at a business like an asset, Wooten said. “The goal is to turn a grape into watermelon,” Wooten added. “I’d rather own 20% of a watermelon than 100% of a grape.”
4. Don’t hold on so tightly to ‘your baby’ that you lose sight of long-term goals and potential for future growth and sustainability. Wright referenced an experience he had where he offered to buy a small business for millions but the owner couldn’t fathom life without running that enterprise. “He asked, ‘What would I do after selling?’ He was so tied to the business that he could not see past not having that business in front of him,” Wright said. “We all have to decide the threshold of pain [in terms of business growth], and what you want to end up with in the long run.”
5. Don’t ignore the value of timing. Consider factors such as current company value, potential value, current company outlook (including operating obligations and goals), and how a larger entity may have a better infrastructure to take your business to the next level if indeed you’re contemplating selling. If you pause or act at the wrong time, it could be detrimental to the viability of your company, panelists echoed.