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It’s my baby syndrome...
As a business owner you have a strong emotional attachment to your business and the idea of ‘giving up’ some ownership sends shivers down your spine. But why is this so? Is it rational? More importantly, is it affecting your business growth?
It is very easy to understand any founding owner’s attachment to their business. You conceived it, brought it into the world and it’s your baby! No doubt your belief in it has been tested time and time again and the business only exists because of your sacrifices and your unwavering commitment and passion. These are extremely emotive forces and the feeling of attachment is as natural as it is between parent and baby.
But do you have to own 100 per cent of your business to justify your attachment and satisfy your sense of just propriety? Firstly, let’s examine why you wouldn’t own 100 per cent.
One day, no matter when, you are going to exit your business. Assuming you wish to do that on your terms and for a profit, you need to be growing your business now. It takes money to grow a business. The majority of the barriers you face in achieving growth can be removed with the right investment.
As an owner of an SME, access to debt finance is more restricted and will remain so. Loans and grants will be increasingly scarce which means you will have to consider equity finance. Considering equity finance doesn’t mean ‘giving up’ equity but rather trading, on an equal value basis, some of your ownership for the money and skills your business needs to grow.
There is an unhealthy cynicism towards equity finance and the public perception of ‘dragons’ and ‘vulture capitalists’ in the past hasn’t helped. However, in more chastened times I’m hoping we will see a new dawn of angels and equity partners joining forces with growth potential companies to reach new heights.
For this to work, business owners must be comfortable in letting other trusted partners be involved in growing their business and accept the impact that will have on their percentage ownership. The alternative to me is far less appealing. The ‘it’s my baby syndrome’ is likely to stunt growth and leave you with 100 per cent of a permanently baby sized business.