Two assessments, not one

On the Executive MBA at Warwick, the first thing the entrepreneurship module taught us wasn't how to spot a good opportunity.

It was how to spot the right one for you.

The framework

There's a Harvard note we worked through, by Howard Stevenson and Shirley Spence, that frames the start of a venture as two analyses running side by side.

One is on the business. Is this a real opportunity? Is the market there? Do the economics work?

The other is on the person. Does this fit the life you want, the risk you can carry, the thing you're actually trying to build?

Two assessments, business and personal.

What happens by the exit

I went back to lecture on that same module recently. It struck me how completely founders drop the second half by the time they reach the exit.

We prepare the business obsessively. The accounts, the contracts, the reduced reliance on the founder. All of it is a business analysis, run to the standard the framework demands.

The personal analysis disappears. At the biggest financial and personal event of the whole journey, nobody runs it.

What the personal analysis asks

Do you want a clean break, or do you want to stay and build the next chapter under someone else's flag?

Those are two different exits. They change the buyer, the structure, the earn-out (the part of the price paid later, if targets are met) and the price you'll accept.

Most founders don't answer that honestly until they're already in a sale process. It's the worst possible time to work it out.

The framework had it right at the beginning. An opportunity is only right if it's right for you. The same is true of the exit.

Start the second analysis now

• What do you want your life to look like the year after completion?
• How much of the business do you want to keep: a role, a stake, or neither?
• What would make you walk away from a good offer?

If you've sold already, I'd like to hear what you wish you'd worked out about yourself before the deal, not just about the business.

Exit Goals in The Founders Exit® starts with your personal outcomes, before structure. Start free at app.thefoundersexit.com.

Source: Stevenson, H. H. and Spence, S., "Identifying and Exploiting the Right Entrepreneurial Opportunity… For You", Harvard Business School Background Note 808-043 (2007, revised 2009).