3 Questions to Ask Yourself Before Giving up on Your Business
We begin to wonder whether it’s worth fighting on or if we should cut our losses and move onto something else.
Maybe you think to yourself that you just not made for business.
On the other hand, you may be asking yourself if you are quitting right at the bottom, and things will only go up from here.
You could be running out of money or time, and you can’t ride out the storm.
Are you digging your own grave by continuing or do you need to keep digging because you don’t want to stop just before you hit gold?
Sometimes we continue even though we know we should quit because we’ve already sunk so much time and money that we refuse to believe that it won’t work out.
Objectively assessing your position is tough when you in the middle of the storm. Asking yourself the questions below will help you assess whether you are heading in the right direction or towards a dead end.
Are you giving yourself enough time to be successful?
Success often takes longer than we thought.
We read about businesses that sold for billions not long after they launched and plan to do the same with ours.
These businesses are the tiny minority that have made this unbelievable leap into success within a short period.
The majority of businesses won’t grow exponentially within weeks of launching and will not sell for billions of dollars.
It also appears that these thriving businesses came about overnight. Often enough, these companies have been there for a long time and have just come to the public attention when they became successful.
For example, Tesla has only become mainstream in the last few years and profitable since 2019 though they have been around since 2003. That’s sixteen years to become what appears to be an overnight success.
“I was an overnight success all right, but thirty years is a long, long night.”
RAY KROC — MCDONALDS
Amazon was launched in 1994 and took a decade to become consistently profitable.
If you are going to build something massive and unique, it will take a long time — perhaps more than twenty years.
Even if your plans are less ambitious than taking over the world, it will still take a long time to become successful.
Your plan has to be for at least five years. You can still find a way to extract a salary during that time, but you can’t expect to become wildly successful much faster than that.
Knowing that it will take many years to become successful, you need to figure out how you will survive those dry years. Are you planning on taking a business salary or can you rely on savings or outside funders?
Have you adjusted your expectations based on reality?
You need to continuously re-assess your progress.
Where did you expect to be at this point?
The chances are that you are not there.
The chances are that you are way behind, and that’s why you are thinking of quitting.
You can throw away that forecast that you made before you started the business. You now know a whole lot of things that you never knew before you started.
You may have had plans to achieve a specific revenue target by the end of year two. Just a few months in you’ll realize that you have significantly under or overestimated this.
Entrepreneurs tend to be an optimistic bunch. You have to be though because if you are a pessimist, you would have found a million reasons not to start in the first place.
Being optimistic you most likely overestimated and this is partly the reason you are thinking of giving up. Now that you are in the business and it’s not just scribbles on a napkin do you need to reevaluate your expectations?
You can now take an honest look at the business and decide whether it is still capable of your goals. If it’s not capable of shooting the lights out can it still provide a tidy profit?
It might not make you a billionaire, but it might still give you a good life.
If on the other hand, you can see no way that the business can become profitable than it’s always best to cut your losses short. No-one would be better placed to make this decision than you — as long as you are willing to be honest with yourself.
You could be in a situation where you realize that the business is not going to hit the targets that you hoped for. Can you readjust the business cost base to become profitable?
This business might be able to give you something. Some profits that can seed your next business or pay for some household expenses while you start another venture.
Instead of having one massive business, you might end up with four businesses that deliver the same profit. If you insist on these businesses delivering what you want instead of what they capable of, you might cripple them with unrealistic expectations.
Are you just running out of money?
If you run out of time or money then the decision will be made for you pretty soon.
Sometimes we prefer decisions to be made for us than we can absolve ourselves. We can say that it wasn’t our fault that we ran out of money.
The truth is that we can do something before we hit that dead end to try and give ourselves more time.
The end goal of a business is to be profitable. The amount of revenue, employees or branches you have, are all vanity metrics. They don’t matter unless they make you more profitable.
It would stand to reason that you can either attempt to be profitable early or you could run at a loss with the intention of making higher profits later. You end goal must still be profitability.
Breaking even early is the best way to keep your options open. If the business takes twice as long to grow to the size you wanted, then breaking even early keeps your options open.
It also allows you to continuously assess the business and how much it can make you. This is much better than hoping to be profitable one day.
The easiest way to do this is to manage your expenses to your current revenue and not what you expect your revenue to be in the future.
We will tend to see small businesses that need to support the owners focus on early profits. We see high-tech start-ups tend to look at the future where they will take over the world and are willing to spend a fortune to get there. Once they reach this end goal in 5 or 50 years, then they will make super-profits.
The problem I have with postponing profits is that you are always on a burning bridge. You have to continuously find more money to grow to keep the business expanding until you reached the promised land.
I tend to favour the profit early approach. This is more sustainable, and you can still use the profits to expand. You can even get outside capital to accelerate your expansion though it would be your choice and not because you ran out of money.
Revaluate the business and see if you can put out the fire by cutting expenses and make the decision yourself, instead of having it made for you.
Be honest with yourself
You may have gone into this business with dreams of how you will make a fortune while still having time to play golf, go to the gym and see all your kid’s soccer matches.
You may now be at a point where you have no time and even less money.
Honestly evaluating your position will help you decide whether you need to cut your losses short, keep fighting on or adjust your business to a new reality.
Having more options makes it easier to make changes to your strategy. If that business makes half of what you wanted, maybe you need to open up another branch or two.
With every day that passes, you will learn more than you knew before and make better decisions. Try and give yourself the best chance of reaching your goal but be ruthless when there is no possibility of success.