- Describing an unmet market need.
- Explaining how you're uniquely qualified to meet those needs.
- Asking for investment funds to make it happen.
- Describing your ultimate plans to sell off the company so investors can recoup their funds.
That last point is called an exit strategy. For better or for worse, it’s become a universal requirement for venture funding and entrepreneurship in recent years.
Think about this, though: What if someone had required Jim Goodnight and his SAS cofounders to plan an exit strategy when they first started SAS back in 1976?
Early plans to sell off the company for a profit would have changed the whole direction of SAS. It would have diminished the company's focus on the customer. It would have undermined the long-term strategy for steady, double-digit growth. And it would have prevented SAS from developing a corporate culture that other companies now seek to emulate.
Investing in evergreen companies
Recently, Tugboat Institute has taken an interest in SAS and other mission-driven organizations that they call “evergreen companies.” According to Tugboat, evergreen companies seek to build sustainable business models, develop long-term goals and provide lasting value for customers.
Recently, we hosted a Tugboat event at our Cary, NC, headquarters where SAS leaders spoke about the benefits and challenges of being an evergreen company. Our advice included:
- How to grow without becoming complacent. One way we do this at SAS is to encourage collaboration and communication among employees, and to build systems that help keep employees informed and helps them understand the value of their work.
- How to support continued innovation. You have to develop a culture that celebrates risks within reason. Not every new idea is going to lead to a new product, but you have to develop programs that continue to encourage new ideas.
- How to find employees that share your same values. Don’t hire anyone that asks about stock options in the first interview. Look for mission-driven employees who share your long-term goals.
About 30 CEOs from various startups attended the event, primarily young entrepreneurs who have started businesses that range from building online communities to selling Christmas trees. One of the CEOs was even a former SAS employee.
It was invigorating. All of the attendees seemed to really care about creating sustainable companies, and not just about becoming gazillionaires in a short amount of time.
One of the goals of the Tugboat Institute is to recognize the benefits of entrepreneurship without an exit strategy. From where I sit, you can see those benefits extending far into the broader communities and the local economies wherever an evergreen company exists.
If you’re an entrepreneur, think about how you might do better with a long-term plan rather than an exit strategy. How could you build a better, more sustainable business if you were in it for the long haul? Visit the Tugboat site to learn more.