Building a business will test your resolve every single day. Unfortunately, most companies do not survive. In many cases, it is not easy to decide whether to continue or to call it quits. You have enough success to barely stay in business, but it is still a daily struggle and cash flow is always tight.
Conventional business wisdom tells us that “winners never quit and quitters never win.” But, as Will Rogers said, “If you find yourself in a hole, the first thing to do is to stop digging.”
The real winners in this world know when to quit. The successful small business owners know “…when to hold them, and when to fold them.” Winners never just stay the course or just go with the flow.
There are many examples of successful quitters. Donald Trump branded companies have gone bankrupt four times. Bill Gates, Mark Zuckerberg, and Michael Dell all quit college to start billion dollar companies. So how do you know when it's time to quit? If you can answer yes to any of these questions, it's the right time to look for that next adventure:
1. Have you have lost passion for the business?
You got into the business because of your passion to create something special. Do you still have passion to move forward? If you have lost it, then it is time to move on because there is no replacement for the founder’s passion—especially when you are not making any money.
2. Are you are still losing cash every month?
Cash flow is the lifeblood of any business. Positive cash flow gives time to retool the company and change course to build a more profitable business. If your company has negative cash flow every month, you need to have additional funds for these losses. At this point, what are the opportunity costs of those funds and could they be more productively used for another business or career?
3. Do you not have a strategy that will be a game changer?
If you only have a vague plan, then it is time to quit. Sales can cure much of the company’s pain, but what is the plan that will really change the core metrics of the business?
4. Have you lost a key competitive advantage?
This could be in the form of an employee, patent, distribution relationship, or a better funded player coming into the market place. What is your plan to gain the advantage back given your company’s current financial situation? What does the next version of the business look like?
5. Do you understand the profitable and unprofitable parts of your business?
If you really don’t get how your company makes money and are not interested in learning, then it is time to quit. In most businesses, 80 percent of the profit comes from one key area. Have you identified it?
Don’t be afraid to quit. Quitting is not failure. It is an evolution to decide what the next stage of your business or career will be.