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Founders Vertigo – A clear sign it is time to bring in a financial or strategic partner

On your journey of entrepreneurship, reaching a point where the business scales beyond your original vision and capability can evoke a mix of pride and daunting pressure. This pivotal moment, which we at Headpoint refer to as ‘Founders Vertigo’ signifies a crucial transition phase in the lifecycle of your growing company.

This tricky juncture often arises just as the complexity and scale of the business is stretching both your management skills and your willingness to bear personal financial risk, to their limits. Often with all your ‘eggs in one basket’, the stakes are incredibly high, making the vertigo not just metaphorical but a stark reality faced by many entrepreneurs.

A clear indicator of Founders Vertigo is when the growing number of employees and the associated payroll burden become overwhelming. As a startup matures, the increase in headcount is inevitable to support its growth ambitions. However, this expansion brings about significant financial and operational challenges. The pressure to meet payroll deadlines can be suffocating, especially if cash flow is unpredictable. As corporate finance advisors, we know that this is a responsibility that weighs heavily on founders, as you strive to balance financial stability of the company with a conducive environment for growth.

As your business has evolved, so too have the aspirations of your management team. They may begin to seek ways to grow their personal value through equity, or to push for strategic decisions that might not align with your own original vision or risk appetite. This divergence, although natural, can lead to internal conflicts and risks, further complicating your ability to steer the company effectively.

If you feel that you and your business have reached or are approaching your own moment of Founders Vertigo, bringing in a financial or strategic partner has likely become not just an option but a necessity.

A partner can not only inject fresh capital, but also offer new perspectives, and provide the strategic guidance needed to navigate the complexities of your scaling business. They can help mitigate risks by diversifying financial exposure and introducing robust management practices and governance to support sustainable growth. Additionally, a partner can bridge the gap between the founder’s vision and the management team’s aspirations, aligning them towards a common goal.

In essence, Founders Vertigo is a sign that it’s time for entrepreneurs to acknowledge the limitations of going it alone. Embracing collaboration with a financial or strategic partner can be the key to unlocking the next phase of growth, and ensuring the longevity and success of the business in an ever-evolving market landscape.

If this is relevant to you, we’d be delighted to speak with you and explore your options.

Not sure a partner is the right option for you? Explore our articles on selling your business, or discover our recent deal completions, here.

Written by Mark Wilson, Managing Partner of Headpoint Advisors, Birmingham.

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