The term “enterprise flipping” refers to launching a business and then selling it. It’s the business equivalent of drag racing. The goal is to quickly sell the firm to a strategic buyer willing to pay a high price for a company that fits its business strategy. Instagram is a prime example. A week following the VC investment, it was sold to double its original value.
In most cases, such as YouTube (acquired by Google), WhatsApp (acquired by Facebook), and Paypal, the switching takes more than a week (purchased by eBay). While selling to corporations may be a great way for both the VC and the entrepreneur to exit, acquisitions haven’t done well for company owners. It is believed that 70% to 90% of business purchases fail.
Building a business without thinking of it as a short-term vehicle for a rapid sale is known as enterprise development. It’s the business version of the Dakar Rally. It rewards intelligence, talents, and stamina. The goal is to create a viable business that will endure long term. This category includes the 99.9% of enterprises that do not get venture capital. And maybe the 80 percent of VC-backed failures should have been in this class – and should have selected this method if they had a do-over in business development.
Entrepreneurs who grow a company from the ground up to more than $1 billion in revenue and value are billion-dollar entrepreneurs. Then there are unicorns, those once-in-a-lifetime opportunities that turn into home runs. They’re the pinnacle of the business development process.
Constructing vs. Flipping: The Steps
The following are the stages in the process of flipping a business:
· Creating a Minimum Viable Product (MVP) and figuring out a potential
· Figuring out a method that works with angel money
· Starting a business with a small amount of money is a good way.
· I am considering a strategic sale or an IPO as a means of departure (if the enterprise is successful).
The stages of business development are as follows:
· Trying to think of a different way to go forward.
· Demonstrating the technique’s potential for advancement
· Reverse-VC financing to help management develop
· Without VC, we’re taking off.
· After a successful launch, we are scaling up with or without VC in Silicon Valley.
Which is the most important factor for business owners?
Flipping a business is a good idea because:
· For the 19% of VC-funded enterprises that are profitable but not unicorns. The venture capitalists who backed these companies after Aha must sell them high. As a result, they sell the projects to strategic investors who are willing to pay a high price.
· In Silicon Valley, where VCs invest a slew of promising startups, business flipping is often reserved for companies that can’t or don’t want to go public but still have value.
· Investing in initiatives with a little upside potential that are part of a company’s division
· When a company caters to a certain market sector, particularly in a very competitive industry, the dominating unicorn wishes to buy out possible competitors and avoid future competitors. One of the reasons Facebook bought WhatsApp was because of this.
· For entrepreneurs looking for a speedy return on their investment in developing a skill and progressing it to the point where a business buyer would pay a handsome premium.
The percentages are the problem with business flipping, which are as follows:
· The company will not get venture capital (99,900/100,000) funding.
· With VC (80/100), the business will collapse.
· The entrepreneurs will experience dilution (100/100).
· The entrepreneurs will almost certainly be fired (fine estimates range from 30 to 100 percent).
The goal of business development is to enhance the company to grow and dominate in the long run. The goal is to create a real business that will survive, thrive, and dominate as a stand-alone entity. The entrepreneur takes a king’s ransom if strategic sponsors offer it. They’ll keep growing if you don’t stop them. WhatsApp serves as a good example. Jan Koum and his partner were building a fantastic business. They accepted it when Facebook paid billions.
Building a business is successful because:
· Because VCs don’t support businesses before Aha – they demand evidence of promise – for all ventures before Aha.
· For the 99.98% of startups that do not get VC funding or fail to do so,
· For entrepreneurs that don’t need or desire VC, as well as a monitor peering over their shoulder.
MY OPINION: The exit should be prioritized when it comes to enterprise flipping. The goal of business development is to focus on advancement. Before Aha, 100% of endeavors were healthier, and 99.981% of ventures were healthier. Only a few people can benefit by developing a minimum viable product and then seeking venture financing to expand. Entrepreneurs need the ability to establish a capital-smart strategy for growth potential till take-off and managerial skills dominate once the business is up and running.
