It’s a problem that will face most entrepreneurs at some point (unless you’re very lucky): if that new idea is not working – clients aren’t biting, the money is not coming in – when is the right time to cut your losses and walk away from the idea, or even the company you’ve set up? Or, perhaps less drastically, is there a right time to change the focus of your business?
It’s no easy decision and many hang on too long to something that’s not working, allowing emotion to overtake what in all probability should be a business decision based on the cold hard currency of fact.
So should I stay or should I go? When to persevere or when to walk away? When to change the focus of your business? When should I sell up? Here are my top five deal breakers, which can help you decide:
The financial risk becomes too great
Every new venture demands some level of financial risk. You might be investing money you’re borrowing, or from hard earned savings, but either way there must be a point where walking away is the right thing to do.
Only you will know when that point is reached but if you’re remortgaging the house, raiding the pension pot, and household bills aren’t being met, then you must be realistic about continuing with the venture. A good business plan at the outset will help you plan what you can afford to invest – if you’re exceeding that amount then it may be time to reassess.
You’re no longer enjoying it
Remember why you decided to work for yourself? If the pursuit of your business idea is threatening that lifestyle or simply becoming a chore, it’s time to reassess what you’re doing. Again, this may needn’t mean quitting. Maybe a change of focus will reinvigorate your love for the business?
No one buys into your idea (including your friends and family)
You have this great idea. You’re ploughing money into getting it off the ground. But how many people are buying into your idea? New clients? People wanting to work with you? New investors? Answer no to all of those and your business is may well be heading down a cul-de-sac. If the feedback from family and friends is equally negative, you know you’re swimming against the tide.
The competition is doing it better
It’s unlikely that you’re doing something completely new and if your competition is, hand on heart, doing it better than you can, again, it’s time to shift to something where you can deliver more value.
This doesn’t mean giving up entirely, but often involves assessing what they’re doing, what you’re doing and exploiting that point of difference. This may require an about turn on your part but could be the best business decision you make. So what can you tweak on your existing business model to make the difference?
You have a better idea
Just because you’re working on one idea doesn’t mean that you shouldn’t change horses halfway through a race. If you see a better opportunity and your current venture seems to fit many of the criteria I’ve already mentioned, it could be time to dismount and invest your energies in the ‘better idea’.
It is perhaps the hardest decision any entrepreneur will have to make. But it’s a decision that has to be made. As the Clash might have agreed – if you move on there will be trouble, but if you keep doing what you’re doing, trouble may well be doubled.
Failure is a fact of business life. There are plenty of examples of successful entrepreneurs who’ve experienced failure before success and the best of these know when the time comes to decisively change the direction of their business, or move on to another idea or venture.
Of course, there is always the possibility that someone might come in to buy your business and make you an offer you can’t refuse… that’s a nice dilemma every entrepreneur would love to have.
Learn more from The School of Hard Knocks:
- When should you grow your small business
- How to achieve the perfect pivot for your start-up
- Common mistakes start-ups made and how to avoid them
- How to avoid pushing your business to heartbreaking mediocrity
- Making a radical career change