August 2022

2022.08.25

What are the Best Startup Exit Strategies for Entrepreneurs?

As a startup business owner, there may come a time when you are ready to leave the company you have worked so hard to build. This decision could be reached for a variety of reasons, and it is not a sign of business failure but rather a calculated move that will benefit you and the future of your company. No matter what your motivation is for leaving, a startup exit strategy needs to be in place.

An exit strategy is typically a requirement when looking for Angel Investments. Angel Investors need to understand your potential exit strategy so that they understand when they could get paid back and the potential return on their investment.

This blog will help you determine which strategy is best for you and your company and what you should consider before implementing it

What is a Startup Exit Strategy?

A startup exit strategy is an entrepreneur’s thorough plan on how they will sell their ownership in a company as a way to reduce or liquidate their stake in the business and ideally, make a substantial profit.

6 Best Startup Exit Strategies

There are many types of exit strategies that businesses can have and follow. We have outlined the 6 best exit strategies for startups to consider.

1. Sell to a Family Member

This strategy keeps your business within the family and brings peace of mind knowing someone close to you will do right by your vision. We often see startup owners selling their businesses to their children as a succession plan when their children have an interest in taking over.

Although selling to family or a close friend definitely has a strong appeal, be aware that sometimes things can get messy when you mix business with personal.

You should have a solid plan on how to navigate conversations about price, timelines, and business management, as well as be prepared once the company is sold that you may disagree with business decisions your loved one has made which can inject stress into family dynamics.

2. Merge or Become Acquired (M&A)

Merger and Acquisitions (M&A) exit strategies involve having your startup purchased by or merged with another company that has similar or aligned goals to your business.

M&A strategies can offer a lot of flexibility in laying out terms for your continued level of involvement with the company, or lack thereof if you prefer to not have any further connection.

One of the pros of M&A is having the ability to negotiate the selling price, but one of the cons is the process can be lengthy, and sometimes, in the end, the selling company is not purchased or is not merged with.

3. Management or Employee Buyout

Another startup exit strategy is to have employees of your company, typically managers, buy your startup. A huge plus of this option is you’ll have confidence knowing that the company’s new owners are people who already know how your startup operates therefore creating a smoother transition.

Selling your startup to people who you know well can make the exit process more flexible and comfortable, and if you wish to remain in the loop or involved with the business they may wish to keep you on as a mentor or advisor.

4. Go Public with an Initial Public Offering (IPO)

An Initial Public Offering (IPO) is when a private company’s shares are offered to the public and serious investors on a stock exchange for the first time, opening up potential opportunities to make great profits. Typically the company hires an underwriter like an investment bank to consult on the IPO and prepare key documents for investors.

An IPO is not a route every startup business will be prepared to take or feel comfortable with, especially since going public opens up companies to a lot of scrutinies and meeting strict regulatory requirements.

5. Sell to a Third Party Buyer

Selling your startup on the open market can be the ideal choice for many business owners. This can be a clean and clear process providing an instant successor who has a passion for your business and the qualifications to take it to the next level.

Selling to a third party can be beneficial due to receiving a lucrative selling price and optimal sale terms, however, in many cases it can take years to find a buyer who is fully interested or that you feel confident in selling to.

6. Liquidate

This exit strategy is definitely the most concrete and final. When you liquidate, you shut down your business and sell your assets. This option does not mean you have given up or are defeated, but sometimes this can be the right strategy depending on your circumstances.

Things to keep in mind are that debts need to be paid off, payouts to all shareholders need to be completed, and you need to consider how liquidation will affect your team and customers.

What should entrepreneurs consider when creating a startup exit strategy?

It is important to note that the best exit strategy for your small business may be an unwise strategy for another. However, no matter which strategy you choose to take, you must carefully consider a wide range of factors.

Questions to consider when creating a startup exit strategy:

Does your exit strategy reflect your goals and company values?

How much does your startup’s legacy mean to you?

Will your strategy make you money and what sale amount are you comfortable with?

How will your exit strategy affect the short-term and long-term future of your business?

What does the timeline look like for your exit strategy to complete?

Do you have the proper support and knowledge to successfully form an exit strategy that will benefit you and your startup?

One of the best mentors for helping with the creation of an exit strategy as well as support while going through the exit process is a startup incubator. Becoming a client of a startup incubator can benefit you and your business tremendously by receiving 1-on-1 mentorship, knowledge, advice, support, skills training, networking opportunities and more.

Operations

2022.08.19

6 Benefits of a Hybrid Work Model for Startups

In March 2020, millions of people worldwide shifted from working full-time at the office to working full-time from home. And although many would agree that the first few months were challenging for a variety of reasons, now almost 2.5 years later this mindset has largely changed.

With new workflows and routines in place, the majority of from-home workers do not want to return to the office, at least not full-time. The Harvard Business School surveyed 1,500 people who worked from home between 2020 and 2021 and found that 61 percent wanted to continue working from home 2-3 days per week.

Many professionals have embraced the benefits that working from home can offer such as greater flexibility, no time lost to commuting, and cost savings, but at the same time see value in returning to the office on a part-time basis so the advantages of a workplace environment are not lost.

But when you’re an entrepreneur trying to take your company to the next level, how can this arrangement work?

What makes a great work environment?

What are the benefits of a hybrid work model for startups?

How do you adopt a hybrid setup as an entrepreneur?

Let’s first review what a hybrid work model is and the different forms it can take.

What is a hybrid work model?

A hybrid work model is all about flexibility, supporting workers’ productivity, happiness, and well-being rather than focusing on their working location. This is typically a combination of working from home, the office, or on the go.

How many workplaces have adopted a hybrid work model?

In an April 2022 survey of 800 workplace leaders from around the world, 77 percent adopted a hybrid working model with an “At-will Model” being the most popular.

What exactly is an At-will Model? It is one of four main hybrid work models that are commonly used in workplaces where a hybrid setup exists.

What are the different types of hybrid work models?

At-will Model

This model gives people autonomy to choose work environments that best support their productivity and lifestyle. The environment where they choose to work can vary from day to day depending on their schedule and the type of project they are working on.

For example, some work weeks may require more meetings than others. During these weeks workers may choose to work from the office more often as in-person brainstorming and collaboration is often richer than on virtual platforms.

In contrast, if a person needs to focus on a solitary project and feels being surrounded by people at the office is a distraction, there may be a week where they only work from home.

The core of an At-will Model is not confining people to work in a certain environment but rather embracing what works best for them.

Split-week Model

The Split-week Model offers flexibility but within particular parameters. Workers split their week between working from home 2-3 days a week and working onsite on the remaining days.

This model within a larger company is often done by assigning certain departments days of the week they will work from home and which days they will come into the office.

Split-week models ensure that team members are connecting regularly and managers can check in with people face-to-face.

Shift Work Model

People work in shifts every day, alternating between working from home half of the day and working on site for the other half. Generally, this model is not ideal as it breaks up the working day forcing people to relocate to a new work environment.

Week-by-week Model

The last model has teams alternating between working from home and working onsite on a weekly basis usually as a collective, meaning everyone follows the same schedule.

This setup can be powerful as everyone works off-site at the same time to focus on individual projects, and then best utilizes in-person time as a team the following week with meetings, brainstorming, and project updates.

Why is a hybrid work model beneficial for startups?

Depending on what stage you are with your startup, you may have a tiny team of 1-2 people or you may be at a point where you have a team that has grown.

Whether you are in the beginning stages or have been growing your company for a while, teamwork, brainstorming, innovative ideas, and collaborative efforts are crucial to a startup’s success so the idea of implementing a hybrid work model may not seem like a good idea at this point in time.

However, there are many benefits to a hybrid work model that will not only benefit your team, but will also benefit you as a startup owner, and ultimately it will benefit your business.

6 Benefits of a Hybrid Model for Startups:

1. Increased Productivity

Every person within a company is different with varied strengths, weaknesses, and the type of environment in which they thrive.

As a startup business owner, you can recognize which team members work best in quiet, focused atmospheres, and which ones excel in high-paced, high-energy environments.

The beauty of a hybrid model is it brings out the very best in every person — those who love collaboration and the social aspect of the workplace can produce their very best work by coming into the office while having the option to work remotely if needed. In contrast, team members who work best on projects in their own space can work from home with the ability to come onsite if needed.

The main message is maximizing productivity is extremely important, and by coming up with a hybrid work model that best suits your company you can maximize your efforts.

2. Increased Work Satisfaction

Enabling both you and your team to be the best you can be through work environment flexibility will naturally lead to greater work satisfaction.

In a survey of 1,000 UK-based employees, 65 percent of people that were able to follow an At-will Hybrid Model were satisfied with their jobs, while only 53 percent working onsite exclusively and 57 percent working from home exclusively were satisfied.

Having your team feel accomplished, productive, and important to the company is something that is invaluable to a startup as it motivates and drives your team to achieve the next big goal or next phase of growth.

3. Improved Mental Health

Prioritizing the mental health of you and your team makes everyone feel appreciated and valued. When you or a team member is stressed, anxious, or overwhelmed it can lead to serious health concerns and is toxic for your startup.

Following a hybrid work model provides flexibility for both you and your staff to take mental breaks when needed, participate in physical activity, and work in a place that is conducive to feeling little stress.

As an example, many people find that taking a walk, doing yoga, or participating in another physical activity as part of their daily routine helps them feel relaxed and more focused when they return to work. With a hybrid work model, they can enjoy these activities and return to working as a better version of themselves.

Work environments can be a significant mental health trigger and some find that working from home is less stressful whereas for others it is the opposite.

4. Better Work-life balance

Let’s face it, life can get busy when we add in work, families, and other responsibilities. When business owners consider their employees’ challenges and personal interests outside of the company, it makes everyone feel happier and less stressed about juggling so much at once.

Since the beginning of the pandemic, many people have enjoyed working from home as it has allowed more time spent with families and enjoying hobbies due to eliminated commuting time. Adopting a hybrid work model is a great way for both you and your team to maintain a healthy work-life balance by being less focused on where someone must work. Working from home most days may remove a lot from some people’s plates, while working from the office may do the same for others.

Another consideration is to loosen the structure around working hours if it is feasible for your company. Some people perform much better in the earlier half of the day while others perform better in the evening. Allowing flexible work hours would allow your team to be most productive in their chosen working hours and take care of personal matters in their not-as-productive hours.

5. Meaningful Company Culture

You may think that not having all team members in the office together full-time could hurt your startup’s culture – but the opposite can actually be true.

Supporting the needs and preferred work environments of you and your team becomes a major contributor to your company’s culture and what you value as an organization. It sends the message that you value people, your time, and overall the well-being and happiness of those around you.

Having this culture is a great way to attract great talent to your team as hybrid work models are something more and more professionals are looking for. This will help greatly in your recruitment processes throughout your startup’s growth.

6. Save Money

Depending on the size of your startup and your team, following a hybrid model may allow you to not have the expense of a designated office, at least during the beginning stages of your company’s growth.

You may ask how a hybrid work model is possible if you do not have a physical workspace, but there are alternative options that allow you and your team to work in-person.

You can arrange to meet as a team once or twice a week for meetings, updates and brainstorming sessions by reserving a private table at a coffee shop or restaurant. Buying your team coffees or lunch once a week will be nothing compared to the overhead costs of running an office.

How do you adopt a hybrid work model as a startup?

Do you love the idea of following a hybrid work model but you’re not quite sure where to start or what you need to do to make it happen? Here is a list of things you should consider to make sure your hybrid setup is well thought out and successful for your business.

1. Requirements from your team

Does your team have what they need to work efficiently from home? Do they have the correct technology or software? Make sure that both you and your team can work as effectively from home as they could at the office.

2. Communication strategies

Because you may have all team members working remotely some days, and other days a mix, having solid communication strategies in place will be instrumental in achieving an effective hybrid work model.

When everyone is physically together, it is easy to quickly speak to each other about projects, but when you are remote these unplanned conversations need to translate to digital platforms.

3. Create effective workflows and processes

Whether a team member is working on the go, at the office, or working from home, the same workflow and processes for your team should apply. A person who typically prefers working onsite but one day needs to work remotely should not disrupt any projects or deadlines.

A hybrid model is dependent on having clear workflows established so the team is efficient and nothing falls between the cracks.

4. Joining a startup incubator

Joining a startup incubator is a great way to work within a collaborative workspace while having the option to have a hybrid work model. In addition to an inspiring workspace, startup incubators provide mentorship and support when working at home.

Innovation Cluster Peterborough and the Kawarthas offers a startup incubator program located 1.5 hours from Toronto, Ontario that supports entrepreneurs to launch and grow their companies from their workspace, virtually, or by following a hybrid work model.

Contact the Innovation Cluster to learn more!

Networking

2022.08.11

3 Ways to Improve Your Networking Skills

If you’re an entrepreneur trying to grow a business, you should already be well acquainted with the world of networking. Attending events, conferences, or speaking with industry professionals is a fantastic first step, but are your efforts effective? Unfortunately, merely participating in networking activities does not accelerate your business; you need to form good quality connections. Building relationships that will help in your company’s growth requires good people and networking skills, which for many of us can be intimidating. To increase your confidence and abilities, we have outlined 3 ways to improve your networking skills.

What are effective networking strategies vs. skills?

To start, let’s differentiate between networking strategies and networking skills. When we talk about strategies, we are focusing on the what and where, and with skills we are focusing on the how.

Having networking strategies is definitely important — what types of events you will attend, what forms of networking you will use (online, in-person), and where the best networking locations are that are relevant to your business.

However, what is less frequently written about or discussed is the how. If you don’t know how to network effectively at events and do not have the right skills, you are missing out on opportunities to form high-quality connections with people who can make a significant impact on your business’ success.

How do you improve your networking skills?

There are always going to be people who learn and master skillsets more easily than others. For some people, networking skills come more naturally but for many others, this is an area we need to consciously try to improve.

Building and improving your communication and networking skills is something that should have no end. It is an area you can always work on.

Our ‘3 Ls’ that will help improve your networking skills:

Listen

When most people think of networking, they think about how they will speak to others about themselves and their business. This is only 50 percent of networking. Many forget about how important it is to be a good listener.

People enjoy speaking to individuals who are interested in what they have to say. Having a conversation is a two-way street, and nobody enjoys speaking with someone who only talks about themselves.

Listen actively and respond in conversations by referencing details. If you meet the same person at a second event, this is where you can really show you enjoyed speaking with them by referencing something they discussed the first time you met. This shows people you are genuine and invested in getting to know them.

Loosen

Networking events are made up of professionals looking to network for business, but that does not mean you need to be super serious, stiff, and ultimately, boring.

The perfect balance is to come across as polished and professional as laid back and likable.

Loosening up a bit and approaching networking with the objective of forming human connections rather than networking your business can lead you to build stronger connections.

Sometimes, this means you are not discussing business at all.

Imagine you are having a great conversation with someone and they start telling you an amusing story from their past camping adventure. It is not wise, natural, or polite to cut them off to talk about business.

Continue this conversation with genuine interest, and it is almost a certainty that the conversation will organically lead to what you each do for work. The more organic and humanizing a conversation is, the better.

Laugh

Nothing will make you more memorable and likable to others than if you share a good laugh.

We know not everyone is a comedian or life of the party, but if you can find ways to naturally insert humour into your conversations it will go a long way. Humourous people are often seen as more approachable and someone people want to spend time with, and adding humour into professional environments can have many benefits.

You do not need to rehearse jokes that will not flow into conversations, but if you see an opportunity to insert some humour, even if it’s subtle, it will make people around you more relaxed and therefore the quality of your conversation can end up being much better.

How do you continue building networking skills?

Continually improving and building your networking skills comes down to one solution: practice. Participating in more networking events, preferably in-person, will give you more opportunities to practice your networking skills so they eventually become easier.

Networking truly can help your business grow, but it is the how to network that will form great connections.

Camila Duarte

Senior Innovation Specialist &

STARTup Visa Program Manager

Startup Visa

2022.08.05

Entrepreneur Immigration to Canada: How to Do it and Where to Go

Canada is one of the top choices for immigration amongst international entrepreneurs, and for good reason. In 2021, small businesses made up more than 98 percent of all employer businesses in Canada—that is a whole lot of entrepreneur-led companies. Between the country’s rapidly growing technology sectors and the government’s support for immigrant entrepreneurs, Canada is the place to grow innovative startup businesses into thriving companies.

But how do you start the process of moving to Canada? Where in Canada is the best place to live and grow your business? We have provided the building blocks to begin your journey as a successful business owner in Canada.

How do you immigrate to Canada as an Entrepreneur?

The Government of Canada offers a Start-Up Visa Program (“SUV”) for immigrant entrepreneurs, providing the opportunity to gain permanent residence in the country. The program is designed to attract entrepreneurs from around the globe to move to Canada to grow their innovative businesses, bringing diverse skills, job creation, and global competitiveness.

Basic eligibility requirements for SUV include having a qualifying business, a letter of support from a designated organization, sufficient and available funds, and entrepreneurs must be proficient in English or French.

Learning more about SUV’s program requirements and other details such as what is considered a qualifying business, the associated costs, and how to apply is a great way to begin planning for relocation.

Where is the best place in Canada for immigrant entrepreneurs?

Canada is the second largest country on Earth, with varying landscapes, cultures, industries, and cities across the nation. Every region of Canada has its own charm and advantages, but it is important to consider where you will most enjoy living and where your business will be most successful.

Living and Business Success in Canada: Rural vs. City

You may be familiar with Canada’s major cities such as Vancouver, Montreal, and Toronto, but the majority of Canada is made up of rural communities.

As an entrepreneur trying to grow a business in a new country, choosing a balance between rural and city is the best way to immerse yourself in life in Canada.

Living in a smaller, quieter town close to a large metropolis gives you the best of both worlds: You can enjoy idyllic lakes and landscapes, and belong to a tight-knit community while remaining a short drive from business opportunities that a large city can offer.

Building your business in a rural community also has the advantage of generally having fewer competitors, whereas in a large city it is likely that there will be many competing businesses offering similar products and services.

Peterborough and the Kawarthas: Ideal Community for Immigrant Entrepreneurs in Canada

In the province of Ontario, located a 1.5-hour drive east of Toronto and close to the U.S. border, is the region of Peterborough and the Kawarthas. Surrounded by hundreds of fresh lakes, rivers, and acres of farmland, the City of Peterborough is a thriving business community that is home to less than 100,000 residents.

Innovation Cluster Peterborough and the Kawarthas, a startup incubator designated to offer one of the only rural Startup Visa Programs for immigrant entrepreneurs in Canada, is located in downtown Peterborough along the bank of the beautiful Otonabee River.

Specializing in innovation and technology-driven companies, the Innovation Cluster’s STARTup Visa Program Canada provides business mentorship, knowledge, skills training, and networking opportunities to prepare international entrepreneurs for business success in Canada and the ability to compete on a global scale.

The Peterborough-based program sets entrepreneurs up for success beginning with a 3-month virtual accelerator program prior to arriving in Canada, followed by a 12-month in-person business incubation program.

The Innovation Cluster operates three cohorts of the STARTup Visa Program per year, with the next cohort beginning in October 2022. Apply today!