Should I quit my business? - A strategic consideration for businesses in the red
August 21, 2014
Resulting from the sleeper success of my LinkedIn post which garnered more than 85,000 views (see When is it time to call it quits?), I received many emails from business owners asking if it was time for them to quit their business. Some have been at it for 3, 5 or 8 years, all of which time not returning a profit. Imagine running an unprofitable business for 8 years! Who is funding the loss? So today we take a look at that question, specifically meant for business owners who are running a bleeding entity and where there is no real end in sight, applying our strategic decision making framework to it.
Related: When you have a BIG decision to make
Should I quit my business?
Get really clear about what your intent is. For most people, it is to start afresh and start earning money for themselves. Let us make this our intent for the sake of discussion.
1. to get out of debt
2. to earn a decent living
3. to see positive contribution on my talents
4. to at least afford one long vacation a year
5. to spend without having to think of how I will pay for it
Quit the business and work for someone else
Branch out on new projects, leaving the business to fend for itself
Get part-time income from an external source
Sell some equity
Thinking in time
This is the process of looking at the past and see what impact it has on our situation. It can also open up options for you to make things better:
1. I have put down all the money I can get for the business but it never really turned in a proper return;
2. Others who are not as qualified as me, or as intelligent as me, have done better than me in corporate
3. I have always been doing things my way but it doesn't seem to be working
4. I need help but I don't have the money to pay for it
5. Other players in the market with similar products are doing very well
6. It's not that I don't have customers, I don't have enough of them!
Conclusion from thinking in time:
My problems may actually be caused by me. It may perhaps not be due to the business but my lack of doing the right things for the business!!
Provided that I can
1. Meet all my household expenses
2. Earn $X a month within the next 3 months
3. Get recognised for my contributions or my efforts
4. Continue spending quality time with my family
5. Start saving for retirement
Drivers and holistic options
The system I am looking at, based on my intent, is "increasing personal income". After drawing the system diagram, the centre of gravity is really my lack of confidence. There is a need to pull myself out of the rut by focusing on what value I bring to any situation, and deliver that value for a fee. This applies to whether I find a new job, I get new projects, I find new clients. I need to be able to look beyond myself and sell my services better!
Technique 1: To position myself as a subject matter expert - get a niche and own it! Become an external consultant or coach for people in this industry based on my experience?
Technique 2: Identify what our past customers saw in our product and use that to find similar ones
Technique 3: NIL
Technique 4: Similar to Tehnique 1
Technique 5: NIL
Technique 6: Can we somehow find someone to JV with?
Technique 7: Don't know
Ultimately, the reframing techniques have allowed me to see that there may be value in what I am doing now and I can take that and use it to build either a new line of business for myself, or to sell that to current customers of the business. Maybe I don't have to quit the business to do this?
Balancing options with constraints
The results are extremely mixed. There doesn't seem to be one out-and-out solution. Of all the options, Options 1 and 3 seem the best alternatives because they have the most ticks and no crosses. But there are also several question marks. Of course, in terms of being able to fulfill the money needs, Option 1 is better; but to fulfill other non-monetary needs, Option 3 is better.
Bracketing to manage uncertainty
There is greater uncertainty with Option 3. Its ability to meet the decision intent is not as strong as the other. Of course the other option has its downside in that it cannot meet non-financial needs. Yet the primary goal for now it to meet that need and for that, it would be better to quit the business altogether. Of course, how you quit, and how you put that into motion is the subject of another decision.
Sometimes, the best decision is the hardest. But when it comes time to go, you have to go. Leaving one foot in the business and one foot out of it will ultimately cause you to doubt this decision, especially when the going becomes good again for your business. Yet quitting the business doesn't mean that you close it down. It could mean you hand over all responsibilities to someone else; it could be you sell your stake in it; or it could simply mean that you walk away and let it die a natural death. Whatever the case may be, based on this case discussion, going is better than staying.