Aspire to be a forever founder and the riches will follow

Aspire to be a forever founder and the riches will follow

In 2001 the average life of a British business was 10.7 years. By last year that number had dropped to 8.6 years. In just over two decades the lifespan of British businesses has dropped by 20%.

Part of that drop is down to business failure. Last year the UK fell into recession and with it there were more than 25,000 business insolvencies last year according to Government figures – the highest on record.

This is up from 13,000 in 2020 when companies were propped up by government schemes such as furlough and low interest loans.

But not all the reduction is down to business failure. Mergers and acquisitions account for a proportion of the reduction in the life span of companies.

Since the early 1990s the value of M&A has been growing, at first steadily up to the turn of the century, then in peaks and troughs.

In 1991 M&A in the UK was worth £1.7 billion. Its value peaked at the turn of the century at £29bn, hitting a second peak of £28bn in 2020 before dropping again over the last three years.

But while M&A activity has been up and down over the past two decades, a new business culture has taken hold.

Becoming a ‘multi-exit founder’ has become somewhat fetishised in the corporate community. Business people who have created and sold their businesses proudly advertise this fact.

Stephen Bartlett is one of many influencers who epitomises the new elite of ‘multi-exit founders’.

His Diary of a CEO podcast is the second most popular in all categories in the UK. His book of the same name is a Sunday Times best seller.

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Elon Musk is another elite of the serial entrepreneur world having co-founded PayPal before founding Tesla, ChatGDP and SpaceX.

If we focus on the financials alone, far more of the most successful business people in the world today have only really concentrated on one successful business rather than being serial entrepreneurs.

Steve Jobs, Bill Gates, Warren Buffett, Martha Stewart, Mark Zuckerberg and, looking closer to home, Richard Branson, Richard Dyson and Britain’s most successful entrepreneurs David and Simon Reuben.

Some of the world’s most successful business people never exit. They stay in the successful business they founded and keep improving it.

Through doing so they don’t just generate more wealth for themselves, they generate more wealth for everyone working in them. Founders tend to care more about the businesses they set up.

A 2016 study by Bain&Co found that companies where the founder was still CEO are 3.1x better performing than others on the S&P500.

So what does this mean for you if you are a founder that wants to exit?

Firstly, just because you have had success once does not mean you can do it twice.

It is human nature to dream of starting fresh, or reapplying your energy to a new passion. But achieving success twice is pretty rare.

Secondly, if you were told today you can never sell your business and will have to sit at the top of it until you retire, what kind of business would you create?

Chances are it would look very similar to a business someone would want to buy.

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It would run itself, profitably, with little intervention from you. It would have empowered teams growing the business and building its value without you feeling you had to grind it out.

It would be highly profitable with loyal clients. And when it makes investments they would not just be those that offer the short term revenue sugar rush of pay-per-click customers.

Instead, it would invest in robust marketing strategies, bringing in customers for months if not years without paying for them through dedicated strategic communications, PR, public affairs and SEO.

The irony is if you build a business you never want to sell, you will be building a business everyone wants to buy.

John Higginson

John Higginson

John Higginson is the co-founder and CEO of purpose-led communications agency Higginson Strategy and host of the Communicating Purpose podcast

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