Almost every article, book or blog post I've ever seen on tips for entrepreneurs ranks "never give up" (or words to that effect) pretty high on the list. An admirable bit of encouragement, but I think it's unrealistic and unfair to many people starting businesses -- or even those managing ongoing concerns. I'd suggest that the more prudent advice is: "Know when to give up."
Gasp! Blasphemy! Quitter mentality!
Not to me. There is a fine line between dogged persistence and determination, and blind stubbornness. Let's substitute the loaded words "give up" or "quit" with, simply, "stop." If we take the stigma out of the language it's easier to consider tempering rah-rah intensity with the calm realization that sometimes stopping is winning. No sane person would encourage you to "never give up" at the blackjack table when you are getting cleaned out. Obviously the best advice (other than not gambling) is to walk away and cut your losses.
Yes, I know that there is a difference between pure chance and control, between luck and planning. I also recognize that actual gambling is a guaranteed loss in the long run. But that doesn't make the analogy moot. We all know that more businesses fail than succeed, whether we want to hear it or not. Business involves chance, control, luck, and planning in varying combinations. And there is always a chance of losing, even for the most relentless planners, executors, and never-quitters.
If you don't accept the blackjack parallel, substitute boxing. You've trained and fought your hardest, but is it wiser or nobler to keep at it when you are a punch away from permanent injury, or stay down and live to fight another day?
Here are just three examples of situations when it may be best-advised to consider stopping and/or changing what you're doing:
- You misjudged the demand for your product, or have an unrealistic business model. This is all-too common -- a passionate entrepreneur has an idea and is positive the world will beat a path to his door. But his "everyone will want this" dream doesn't come true. Emotionally attached to his baby (and often unhealthily encouraged by friends and family), he refuses to see the situation for what it is and pushes ahead, as if he can change the world's mind.
My advice: If people aren't buying what you're selling and nothing you can do will change that, let go. Acknowledge that it isn't happening and move on.
- You are in way over your head financially. We've all heard business stories about people who maxed out their credit cards, mortgaged their lives and put their families at great risk. But we tend to hear more about the "heroes" who pulled it off and built great companies, because those are the cool, inspirational stories. We don't hear so much about the (many more) people who went for broke and, well, went broke. It's not as glamorous and doesn't sell as many books. For the vast majority of people and businesses, betting the farm is just a bad idea.
My advice: One of the cardinal rules of investing and other risk-taking is to never risk more than you are truly prepared to lose (or as Dirty Harry put it, "a man has to know his limitations"). Be honest about your financial limits and act accordingly.
- You are in a bottomless pricing/profit pit. If you run a small business competing against many others -- especially if the others have deeper pockets -- and price is the critical determinant of success, you might wind up competing yourself out of business. There's no victory in winning a profitless sale, and the idea of "investing in building market share" or "making it up in volume" can be dangerous thinking, especially for a small company. If you can beat someone's price, someone else can probably beat yours.
My advice: A race to the bottom is a losing proposition, and if your business won't allow you to make a fair and consistent profit, it's not a business.
In his book The Dip, the always thoughtful Seth Godin summed it up nicely: "Winners quit fast, quit often, and quit without guilt."
Do you agree, or do you subscribe to the "never say die" school of thought? Please share your thoughts.
Other articles that might be of interest:
- Surviving Tough Times: 100 Entrepreneurs Share Their Tips
- Who's Afraid of the Big Bad Box Store?
- All The Business Advice You Need - From My Old Man
(Flickr image by Portobeseno)