Business

It’s an exit, but not as we know it

Rather than push pitches, investors and exit strategies at our entrepreneurs when they walk through the door the emphasis should be on encouragement to reach the dream not the money.
Rather than push pitches, investors and exit strategies at our entrepreneurs when they walk through the door the emphasis should be on encouragement to reach the dream not the money. Rather than push pitches, investors and exit strategies at our entrepreneurs when they walk through the door the emphasis should be on encouragement to reach the dream not the money.

WHILE there is much hand wringing and heartache over Brexit, the possibility of a British exit from the European Union, there is a much more worrying exit sign over the Northern Ireland economy’s front door.

That’s the one through which too many businesses here are heading, selling our creativity, innovation, ideas and ambition to external investors. This is the exit that takes businesses away from our entrepreneurs, away from local communities, away from Northern Ireland.

We want more companies in Northern Ireland like Glen Dimplex, First Derivatives, Norbrook and Almac. These are companies that did not sell out, who stayed the distance, who are now rooted in Northern Ireland. They create jobs and prosperity here. We all want more of these, but it is becoming increasingly difficult for our entrepreneurs to hold on due to challenges competitor nations do not face.

For instance, a key element of enterprise training from a very early stage is the investor pitch, being pitch ready and then critically and irreversibly damaging: having an exit plan seems to be more important than customers and sales. There is a mind set or culture that sees investment as business success. Business should be about making money not taking money.

In different sectors, different growth models are required, but if you start pitching to investors too soon you will rapidly dilute your shares, lose control and have no choice over when to exit. Investors normally want a return on their money after 3/5 years and if you can’t afford to buy back, again you may be forced to exit early.

Different people start companies for different reasons, and that can influence their exit strategy. Some people want to change the world when they start a company, some people don't want to work for anyone else. For them business and self-employment is a life style choice they want to stay small for perpetuity.

The right exit strategy depends a lot on the objectives of the people who own the business. Initially, the founder owns 100 per cent of the business. If they take on investment over time from venture capitalists, angel investors, equity investors, or individuals, they usually give up a portion of the company, or shares and those shareholders will have a say in any potential exit strategy.

Rather than push pitches, investors and exit strategies at our entrepreneurs when they walk through the door the emphasis should be on encouragement to reach the dream not the money.

Northern Ireland needs FDIs, investors and acquisitions but we also need indigenous sustainable growth. We need business owners who don’t exit, who never even think of exiting because they are focused on building the global company that is their vision.

Incidentally a Women in Business survey on Brexit is currently running at 90 per cent who say “don’t exit”!

:: Roseann Kelly (roseann@ womeninbusinessni.com) is chief executive of Women in Business (www.womeninbusinessni.com), the largest and fastest growing business network for female entrepreneurs and senior women in management in Northern Ireland with more than 1,000 members. Follow Women in Business NI on facebook at www. facebook.com/women-inbusinessni or on twitter @ wibni