The journey that is running your own company is an exciting and perilous one. From early thoughts, to starting up, operating and growing, learning new challenges on the fly, and finally considering the many types of exits, there is so much to see and choose on this expedition.
Over the past year, we have been putting together a collection of stories about different aspects of life as an owner of a small to medium size A&D business. We’ve complied a collection of some of the more popular ones here. Remember the last time you were on a tough hike through a National Park and would come across an informational sign that would highlight something you may not know? Think of these short articles as those little stories. I’ve divvied them up into different sections of the trek.
The early days – This looks fun. And scary. I’ve always wanted to come to this place. I can’t wait to get going. Some things on your bucket list you just have to do. You’ll beat yourself up for not trying if you don’t.
Hindsight is 20/20, at least that’s what they say. Just like any good trail guide, these are the essential items I wish I had kept in mind when starting my own defense contracting business.
Growing, Scaling, Sustaining
The long part of the trail, mostly uphill with some rock slides and avalanche dangers. Be sure you pack lots of supplies and know where to get more. Use the buddy system.
Culture is critical to the success of a growing company. It is intertwined with the personality of the founders and the leadership team, but it takes on its own persona as the company grows. Many people misunderstand what drives that evolution and how to shape it to be positive for everyone involved. Things like perks and incentives often get inserted in and called “culture”. These aren’t the substance. They are the seasoning that goes on the meal. Here is an actionable discussion on things you can do in your company, small or big.
Growing, small companies don’t just move up a linear hill to the promised land. There are many well-known levels you will reach where you need different things from yourself and your leaders. A 10-person company has different needs than even a 25-person company. Kate Ripp, a successful leadership coach has seen it all. She provides some excellent insight in this interview.
Public relations and your company brand are far more important than you may think, even in the defense space. Most think that’s mostly a commercial issue. Paying attention and fostering a strong brand really reinforces that culture and sense of identity you have built. It can supercharge morale, a sense of belonging to something bigger, while boosting your recruiting. It also has a tremendous impact on your enterprise value and how the market views you.
As you grow, questions about the usefulness of boards comes up often. How should you structure a Board of Directors? What about Advisors? What’s the difference? The answers may not be what you expect
If you make it far enough into this journey, there are many unexpected things you may see. Some of them are exciting and special, others are dangerous to navigate around, especially if you don’t see them coming. They all make you realize you have taken the road less traveled.
If you are a technology company, a strategic view of your Intellectual Property ( IP ) is critical. It’s very easy to fall into a hole you can’t get out of here, especially when you intersect IP law and the federal acquisition laws in the defense sector. Mike Martensen is both an outstanding IP attorney and a retired US Air Force pilot. His understanding of both arenas, and how they interact, provides an outstanding pedigree for companies in this space. This Interview with Mike covers some early topics you might see.
You may find yourself at an unexpected twist in the road, considering exporting your company’s capabilities outside the US. Wow, how ow fun is that? While this is a fun and exciting twist, it is also full of challenges. Rachel Booth is an expert on Trade Compliance, and she was kind enough to provide some thoughts for companies just getting started in this thought process.
As your company grows and becomes more complex, your strategies can have a significant impact on the taxes you will be paying. Jenn Zhou from Plante Moran provided some very insightful comments on this subject. Some of these thoughts are especially relevant in an environment where the tax code is being revisited and likely going up
Heading Back Home. Finding the Right Exit.
Eventually, the trip will move towards an end and you need to start planning your way home. Decide how you’re going to do that now. Have you charted out one last death-defying hike down? All or none? Or do you see a path to guide your team out through that doesn’t risk everything? Or are you happy and/or exhausted, looking forward to that ride that going to come pick you up and shuttle you out of the wilderness?
There is one particular pattern of exiting that I am especially fond of. It’s a method that gives you, your team and your overall company an opportunity to level up while having the potential to dramatically raise enterprise value. All without your actual exit from the company. I built an explainer whiteboard video to describe this path.
Poker is so interesting and nuanced. People that love playing the game seriously, will find so many counterparts to real life situations in the game. For fun, here are a couple articles that use those parallels in discussions revolving around exiting from your company.
Though it seems like all exits mean you are leaving, that’s not at all true. Some people just don’t want to leave yet and are looking for a solution to pull back from their company some without fully handing over control. There are many permutations of this scenario. This article touches on some of those.
A good company strategy doesn’t ignore exit planning just because it’s many years away. Some things are worth considering and factoring into your strategy now. It can always be, and should be, revisited periodically. Having a sense of where you might be going can inform your current plans dramatically. Think about an exit, even if it’s far away.
Flying solo can be an exhilarating way to explore new territory. Not always though. Sometimes you spend all day fishing in a river you know has fish, but nothing is biting. Maybe someone who has spent their life in that park knows why and can show you a few tricks to land you that fish.
Just because we’re acting as a guide, doesn’t mean we can’t have some fun with it. Here’s my quick and dirty explanation on how HSP might be a tour guide for your journey into defense contracting business development.
Running your own defense industry company is an exciting journey, and proper preparation can help you enjoy that hike no matter what mountains you have to climb. If you’re interested in discussing some of the nuances of this industry, whether it be future exit planning or how to grow your own, unique company culture, give High Stakes Partners a call.