How Not to Exit a Business and a Story of Redemption
How Not to Exit a Business and a Story of Redemption
By: Alicia Ritter
This is the story of a female founder who started her company well, but it ended poorly. Due to her own bad choices.
That woman is me.
How to redeem oneself?
The answer: help other women founders avoid the costly mistakes I made – financial, psychological and emotional – by running everything you have built and worked for into the ground by acting too hastily, while under too much stress, without asking for help.
I founded Ritter Public Relations in Boise, Idaho, in 2011, as I saw a need for a public affairs firm to advance a company’s legislative and public policy goals. Armed with a healthy six-figure client contract, I bootstrapped the start-up, renting space in the legendary Hoff Building in downtown Boise, hired my first two employees, and we were off to the races.
In less than a year, Ritter PR had 4 full-time employees, a fractional CFO, two professional PR contractors, and an envious list of Idaho’s blue-chip healthcare, education and private foundation clients. We grew fast and furious. We got an early and decisive public affairs win with the Idaho legislature, one that had been tried several times before (with male-owned lobbying firms, 😉), without success. It set us up for more long-term contracts with key players statewide, squarely positioning us as legitimate, real and successful.
A couple of years into the ride, the founder of a highly successful Ohio-based PR firm walked into my office, sat on my couch, and asked for my hand in marriage – how much did I want to sell my business to him? It was a strategic acquisition for him, effectively opening the Intermountain West to his east-coast based agency.
What? No dating. No engagement ring. No courting. No telling me how beautiful and great and successful I was. I literally kicked him out of my office. He proceeded to start his own PR firm down the street, it is still in business today.
A few years later, the cracks began to show. I had grown the business to where it needed someone besides me to run it. I like starting and growing things, I don’t like the running or the managing people parts. At this point, I was also serving on a bank board and chairman of the board of Idaho’s private club. I was working 7 days a week to keep up with servicing clients, managing the agency, and driving new business development – fueled by my own internally-imposed growth imperative. I was exhausted. Burned out. I couldn’t find someone internally or externally to run the business – or so I thought.
The clients were there. The work was there. The money was there. But, I was starting to check out. And, to dream of things like watching daytime TV. Walking on the beach. Or, moving away. I had never contemplated an end-game, and clearly, now, was too spun to think past whether to wear blue or black shoes to work.
After about six months of living in this “what do I do” space, I notified my team that I was closing the doors, canceled my office lease, and proceeded to take my biggest client to my home office to service with the help of one subcontractor. Oh, the relief. I was free.
Oh, how that freedom cost me. Dearly.
I didn’t realize it at the time, but with that one ‘simple’ move, I drained all the value out of everything I had built, invested in, and worked for. And, I disrupted the lives of some very loyal employees who had been with me from the start.
How could I exhibit such poor judgment? This wasn’t my first rodeo.
Several years before, I had sold another, much bigger PR firm, with two partners, to Ogilvy PR, a WPP-publicly traded company on the London Stock Exchange. We did it the right way. We drew up a planned two-year exit strategy starting with testing the business for 30 days with the owners completely gone to see what went well, and where we needed to shore up. We grew the next generation of talent to be able to run the business without us, to be the face of the agency, and to get work and service clients without our involvement. We hired an outside CFO, got the financials in tip-top shape, the processes and procedures we finely tuned, we had client contracts signed for several year renewals. We found a buyer, negotiated our multi-million dollar earn out, and exited the business following fulfillment of our employment contracts. We deposited our funds and went our separate ways. Textbook case study.
Why did I not think of all of this, and plan for a smooth and profitable exit the second time around? It has taken me a few years of reflection to land on the four main things I believe, in particular, got in my way:
Ego: I should have either been more open minded when a suiter came calling, or I should have gone back to him (with my tail between my legs) when I was ready to sell. It’s important to keep the emotion out of business dealings. Ultimately, my hubris killed my business.
Burn out: Bad decisions are made in the midst of complete exhaustion, asking for help is critical. I didn’t seek the help of recruiters to find talent to run the business. I didn’t consider engaging a partner to come in to manage the firm and share the load. I wasn’t comfortable leaving the business in “maintenance mode” for a while as I got my mojo back, instead I kept the foot on the gas, and careened into the wall. I didn’t consider a buyer or strategic partner to protect the value I had created. Burn out won and killed my business.
No exit plan: I never stopped when I had the time and energy to consider what an exit looked like. Exit plans need to be developed in the good times (as I had done before)…to give an owner the time to investigate what’s working and what’s not; and to address what can be done to strengthen the asset to maximize its value and ultimately the sales price. You cannot plan for a successful exit when you’ve hastily taken the first turn off the freeway onto a long, dark, dusty road to nowhere. No exit plan killed my business.
Lack of mentors: Over my career, I never had a stable of mentors or advisors, particularly female, whom I could turn to in times of challenge. I had partners, but it wasn’t the same. I was always a ‘go it alone’ kind of gal, and that had consequences. I wish I had spent more time building a female support system to be there when I needed it the most. To talk me off the ledge, or to help problem solve and arrive at alternatives to help me exit with value and honor. Lack of support killed my business.
So, to end where I began. I can’t go back, but I can do something with what I have learned. 😊
I am highly motivated to help female founders save and/or exit their businesses on their own terms. To get the value out of what they put into it. To leave or change their status in the business in a way that honors their investment, professional reputation, and legacy. To be able to look back many years from now and to feel good about achieving the success, impact, or financial security they set out to achieve.
This was all brought back to me recently. A colleague asked me to meet with a female founder who was at the end of her rope, wanted to close her doors, take her two biggest clients, and work happily out of her spare bedroom. The hair stood up on the back of my neck when I heard that…STOP, I screamed! Don’t do what I did!!
She and I met for coffee, and after, she texted me that she left the meeting with a great sense of relief and comfort, and felt that I totally understood what she was going through. I am working with her to not only stabilize the business, but to get it --- and her -- to a point where she has the time and space to build an exit plan that works for her. That protects her investment and maximizes the value of what she has built.
I have exited a business the right way, and I have certainly exited the wrong way. This is my “why,” why I am motivated to help female founders protect and maximize what they have put their heart, souls and talents into. It’s called redemption. And, it feels good.
