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Evolutionary Capital: An Alternative for Business Owners and Investors

Owner Investment in his or her businessEvery small business owner goes through an evolution at some point in their entrepreneurship. For most, the first stage of owning a business typically involves having an uncompromising passion for the products or services the company is built on. While it may come with a steep learning curve, it also includes big payoffs as the business begins to grow and your skills as a leader become more refined.

Yet, the relationship between owner and business takes on an entirely new definition when the transition from here to subsequent stages begins to occur. And it’s during this part of your evolution as a business owner—and small business—that you start your shift from being a problem solver for your clients to someone who wants to see your company scale beyond what it is today.

It isn’t that your passion and enthusiasm for the business ever goes away. In fact, it often deepens and matures as you get a clearer perspective on how to keep your company moving forward. Where you initially put all of your attention on carving out a presence in your industry, you now see your attention move to a somewhat new, but equally important motivator: getting returns on all of your hard work.

For small business owners, these returns come in several different packages. They can include having a team that’s as passionate as you are, greater company transparency, a robust business plan, and more accountable work culture. Yet, whenever returns are spoken of, more often than not the discussion comes down to how well your company is doing financially. It is, after all, how your company’s growth is measured, and offers a good indication of both your short-term and long-term trajectory.

Knowing this as entrepreneurs ourselves, we designated financials as the first pillar in The Five Pillars of Business Freedom. And it’s these pillars which have informed every decision we’ve made throughout our time as small business investors, and given us a blueprint for successfully evolving businesses past the hurdles of their second stage of growth.

As part of our overall investment growth strategy, known as Evolutionary Capital, we’ve helped dozens of small businesses make the transition from the critical, but precarious, second stage to position themselves as bona fide leaders in their industry. And in an economic environment that is seeing diminished returns for both investors and small business owners, having a workable and effective means of delivering meaningful returns is the name of the game.

Even powerhouse investment groups are feeling the pinch, as evidenced by the Carlyle Group, who allowed The Wall Street Journal to sit in on a call with their investors. For them, it wasn’t business as usual, as they outlined what to expect from investor competition, saying:

Right now, it is tough to earn returns of 20% or more in the private-equity business…We’re constantly outbid around the world by other private-equity firms [who are] willing to take lower rates of return than the kinds that we’ve averaged over our history.

This, of course, gives Evolution Capital Partners a unique positioning among other investment firms. It also opens the door to even more opportunities as small companies see the value of our implementation of the sound business practices that ultimately drive our capital investments even further.

When put into action, our strategy has been the key to not only pushing small businesses beyond the second stage, but it’s established these companies as frontrunners in their respective industries. If you’re interested in seeing how the numbers panned out, and how your own small business might benefit, be sure to take a look at our case studies or dive deeper into our process by viewing our Investment Funds Overview.

As entrepreneurs, we want every small business owner to maintain a Passion for Possibilities, and see their dreams of being successful come to fruition. And as small business investors, we know what it takes to get there, so we invite you to contact us when you’re ready for these dreams to take shape.

Posted by: Jeffrey Kadlic A co-founder and managing partner at Evolution, Jeffrey has spent the past 15 years as an investor and private equity professional with a true passion for working with dynamic small businesses. @kadlic

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