The excitement and buzz of Silicon Valley are definitely what makes it the technology capital of the world, but peer pressure in the region tends to lose sight of many entrepreneurs. In the Silicon Valley, the control list of each contractor almost includes: getting the venture capital, developing beyond the craziest dreams and make an introduction on the stock market or sell to Google. With less than 1% of the startups that become funded and less than 10% of these companies have excellent exit or an introduction on the stock market, you have a picture of 1 in 1000 to meet the objectives on such a checklist. .
Of the 999 others, most of them generate very little income and simply flying. Some become viable technology companies without external funding and get significant growth until they comprise between $ 5 million and $ 20 million. While such companies are growing up, most believe that their growth path will continue a little longer than it does. As a general rule, once they arrive at this plateau, they are blocked and have a difficult time growing because of one of the many reasons:
Their technology or offer begins to become obsolete because of a new technology, a service or a new website
Their well-funded competitors are starting to bring their customers due to more expensive marketing campaigns, a lower cost or a better service
A company like Google starts to offer the product for free
Once you arrive at this point, it is very difficult to reverse the damage. At this point, many technology companies believe that if they simply bring value to the customer, they can usually compensate for the above negative factors. Sometimes they can continue to grow, but generally either the competitor is a step away or the increase in value does not justify the increase in the cost of the customer. So, what is the best way to beat the tray? When your business is at a long-term tray, the response is to sell the company or to assume a majority partner that can help you develop synergy, capital and management. If you do not do one of them, you certainly do not get the best return on your investment and you risk losing your whole investment in a few more years.
In fact, the best time to sell a technology business is when you grow up. Our geographical rule is that while the company’s revenues increase by more than 20%, it is better to continue to develop society. When he begins to vaccinate around 20% or falling below 20%, it is better to sell the company. The reason is that the sale of a business with increasing forecasts is much easier than to sell a corporation with forecast or nominal forecasts. Buyers generally examine your company’s forecasts to determine its value. It is therefore much better to be able to offer strong and growing forecasts that a buyer can believe.
Thus, taking take away is that if you are self-sucked or a bootstrated technology company that sees good growth, probably, it will end. Therefore, you must make a decision if you will continue to try to develop the company or if you capture the value you have already created for the company by selling when your business is in solid position. If you try to continue growing, you have a good chance, you go flat and probably decline. Remember objectively and choose the right path.
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