From the February 2009 issue of Entrepreneur

It probably looks like a long way from where you and your company are now to where Bill Gates and Microsoft are. And it's further than you think, says Jon B. Fisher, entrepreneur and author of Strategic Entrepreneurism. That's because IPOs--the traditional way entrepreneurs and venture capitalists fund growth and eventually cash out--have grown increasingly rare. "The model has to change," says Fisher, who has started two companies and, rather than going public, sold them to larger acquirers. Startups today should strive to emulate that model rather than the example set by Microsoft, Google and other entrepreneurial icons, he says. He offers these tips for guiding your company to a great sale:

  • Sculpt your business from inception so it appeals to a cross section of likely acquirers.
  • Develop products and services that satisfy the needs of one or a handful of big companies--ideally, ones your likely acquirers would like to have as their own customers.
  • Raise only enough capital to reach milestones--such as selling to those key customers--not to dominate your market.
  • Build technology that will scale to a size that fits a likely acquirer's business model.
  • Staff your company with people who have previously worked for likely acquirers.