Phil Nadel

While selling your business to a PE firm may be a good option, it's important to understand that you will likely be dealing with a lot more bureaucracy than you are accustomed to. Many entrepreneurs do not thrive in this type of environment and end up longing for the culture they had as an independent startup. I advise you to fully explore the PE firm's culture and the level of independence they offer to the companies they acquire before you sell your company to them.

The key here is all about communicating with your partners. It's critical before embarking on a partnership together that you clearly communicate what you roles and responsibilities each of you will have, what you expect from each other in, and what areas are considered non-starters. And then, after the partnership is formed, this level of communication between you must continue to ensure success.

Rick, I completely agree with you about the importance of those 3 KPIs. I would add a fourth one as well and that's CAC Payback Period. If it takes longer than 12 months for a company to recover CAC, that's a sure sign that they have not yet identified capital efficient customer acquisition channels. In turn, that means they will need to raise a lot more capital if they want to continue to grow. Whereas companies with faster CAC Payback (e.g., <6 months) are able to recycle their customer acquisition budgets much more quickly and are much less reliant on additional outside capital.

Investor communications is not only the right thing to do for your investors, but it is also in your best interest. First, your investors are eager to help you. Do not be afraid to ask for their assistance in your investor updates. Second, the process of creating investor updates is an important discipline for you. It gives you an opportunity to reflect on your company's progress, where you need help, what's working and what's not working. It also forces a sense of financial discipline so that you can report accurate figures to your investors. This process also insures that you always have an accurate and current financial picture.

If your new self-employed business is in the same field as your full-time job, try to secure your employer as a customer. Of course, do this only after you have tested the market, have some early indication of product-market fit and have decided to leave your full-time employment.

During a transition from full-time employment to self-employment, it's a good idea to initially treat your new venture as side hustle. It's important to determine the viability of your new business idea before giving up the income from your full-time employment. Once you have some early indication of product market fit--meaning, you have a few customers who are paying for your product or service--you can consider if and when it would be beneficial to leave your full-time job. In order to make the transition as seamless as possible without significantly reducing your income, make sure you have several repeat customers first. And be careful not to burn any bridges as you leave your full-time job.