Where Are You in Your Entrepreneurial Life Cycle?

Knowing the stage of your career as a business risk taker will help you invest logically in your company going forward

Where Are You in Your Entrepreneurial Life Cycle?

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Just as we experience spring, summer, fall, and winter, there are similar seasons for entrepreneurs. Understanding where you fit into these cycles determines how you approach growth, helps pinpoint your most comfortable financial options and makes evident your tolerance for risk.

What are those four cycles? Here are some easy-to-remember names: Growers, Gliders, Speed-Bumpers and Exiters.

Consider the case of John, in his early 60s, whose company has coasted along for years. The business is growing steadily, although at a much slower pace than 20 years ago.

John is financially set for life and wants to enjoy retirement by traveling with his wife and spending time with his grandchildren. Although there’s no immediate hurry, he’s looking to cash out from his company, which is now largely in the hands of his capable daughter. As you might guess, John is an Exiter.

At a social function, John strikes up a conversation with a husband-and-wife team named Jason and Tara who run a fledgling company of their own. Jason and Tara have just won a significant contract and their services are receiving good reviews, but they need capital to meet their demands.

These classic Growers ask John for advice, figuring (correctly) that he’s seen it all. So what does John tell them? An aggressive businessman all his life, John tells Jason and Tara to be bold — which is the only way to successfully get through each individual entrepreneurial cycle.


A Grower is the type of entrepreneur typically depicted in film, on TV, in books and all other forms of media. These are the business owners looking to expand their operations, often rapidly. They generally have a healthy appetite for assuming risk and are loaded with self-confidence.

John tests Jason and Tara by asking them what they’d do if they received a $1 million gift. Would they invest all (or most) of that money directly into their business, or would they hold on to it, essentially saving it for a rainy day?

John is happy when his newfound friends don't hesitate before saying they are confident in their business and figure that investing the money would go a long way toward solving their growth issues.

John tells them that since their business prospects are solid, there are numerous financing options available for them, ranging from the tried-and-true U.S. Small Business Administration loan to the ancient practice of factoring to everything in between.

While John is speaking, his audience grows, enthralled by the wisdom he’s imparting. One of the listeners is a longtime friend named Mary whose small chain of stores is stable and profitable. She is a Glider.


Mary tells the group that she’s reached a happy point where she’s making a solid amount of money, expects her business to remain sound and is loath to wreck a good thing. John’s been somewhat of a mentor to Mary over the years, so he poses the same hypothetical $1 million gift question he just asked Jason and Tara.

Mary waffles a bit. She first says she would place a significant chunk of that gift into mutual funds, happy with a smaller return but still available to be used if need be. After more thought, she decides to place about 75 percent in her business because she realizes she is already generating a higher return than what a mutual fund offers.

John approves, noting that keeping a business on an even keel is never a bad thing, especially for someone like Mary, who is beginning to consider retirement options. He also points out that since her business is doing well, there’d be no shortage of palatable financial options available if the need arose.

The conversation lurches in a different direction, however, when a frazzled-looking entrepreneur joins the discussion. That would be Derek, the founder of an online store. Derek’s business was growing at a double-digit rate, but he overestimated his market and is now stuck with a warehouse full of unsold goods — not to mention his bank wants to pull its line of credit and is demanding repayment.

Derek, a textbook Speed-Bumper, asks John what he should do.


John points out that a little rain falls on most people’s lives at some point, and entrepreneurs aren’t immune. Again, he brings up the hypothetical $1 million gift.

It doesn’t take long for Derek to gain clarity when he says that he would plunk most or the entire hypothetical $1 million gift into his business. While some nonentrepreneurs might consider that foolish, Derek realizes that for any business to succeed, it requires the stomach for at least some risk along with overriding confidence. By stepping back, he realizes that — missteps aside — his company and business model are viable and will need some fine-tuning.

John cautions that challenges might lie ahead because some financial options will be closed to him. And the options that will be open may carry a greater risk (or interest rate) or even the possibility of surrendering some equity.

Having provided his sage advice to the others, the group of entrepreneurs questions John about his plans.


John replies that even the most fervent entrepreneur will walk away at some point. The reason why doesn’t really matter. The group then turns the table on John and asks him what he’d do with the hypothetical $1 million gift.

Not surprisingly, he says he’d invest half of it in mutual funds and put the rest back into the business, noting that it would help his daughter as she continues operations. John points out that succession planning is important, but too many businesses either overlook it or give it short shrift. After all, who wants to be thinking about the distant future when the thrill of running a business still looms?

He notes that eventually that day comes, however, and transitioning power is a delicate process, especially when you consider your legacy, not to mention tax concerns, heirs (whether or not they’re taking over the business), and dozens of other things that often aren’t considered.

John does say that the exiting process, which should be a joyful time, can become burdensome and require professional financial assistance. With that, the group begins to break up, each having gained a bit of clarity in regards to their particular situation.

One Size Doesn't Fit All

As entrepreneurs yourselves, what have you learned from this hypothetical situation?

No matter what cycle they’re in, entrepreneurs are a fascinating breed. They represent much of what makes the American business world so great. That said, entrepreneurs don’t know everything and tend to look at the big picture and forgo some of the fine details. That’s why they sometimes need outside help. The key is recognizing that no two businesses — and their financial situations — are alike and they can’t be addressed with a rote game plan.

About the Author

Ami Kassar is the founder and chief executive officer of MultiFunding, a speaker, and the author of the book, The Growth Dilemma. For more information, visit www.multifunding.com.


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