Indefatigable business owners

By John Lindsay

Entrepreneurs are inherently wired to initiate, cultivate, and oversee private businesses. Drawing from my 25 years of experience working with them as clients, I’ve observed their unique mindset and approach.

The prospect of willingly embracing the risks and challenges associated with running a business might seem daunting to most. Yet, entrepreneurs forge ahead fueled by their unwavering belief that they can succeed. They persistently put one foot in front of the other, undeterred by opposition.

Their tenacity is both an asset and a liability. On one hand, it breathes life into their enterprises, driving them forward. On the other hand, it can blind them to potential pitfalls. Starting with limited capital, they willingly accept the possibility of losses.

As their path becomes clearer, entrepreneurs take on debt to invest in production and secure working capital for expansion. This journey is arduous, often spanning a decade before banks recognize them as prime loan candidates. By paying off loans and generating revenue from assets, they progress through the middle phase.

However, vulnerability looms. Low valuations from private equity buyers and taxation threaten their hard-earned gains. Despite personal sacrifices, they prioritize the enterprise over personal wealth, leaving resources within the business.

Eventually, they confront their mortality and evaluate the worth of their efforts. Hubris at this stage can prove costly. The chart illustrates their journey: A marks the beginning, followed by the middle phase (B), and then the twin destructive forces—valuation challenges and taxes—loom.

Upon exiting, business owners retain only the “C” portion, while private equity firms acquire assets they didn’t fully pay for, followed by the tax department’s share. However, alternative strategies can mitigate these forces, ensuring a well-deserved exit.