Business ownership isn’t for everyone- up to 90% of new businesses fail (or fail to succeed) within five years and 60% of businesses don’t earn a profit in their lifetimes.
With that in mind, I figured I would have my wonderful network of experts and entrepreneurs weigh in on when they think it is the right time to quit, give-up and/or move on from a business endeavor. Their answers are presented below in no particular order.
You may notice some similar insights, but I kept the concepts separate, as something in the way one is framed may resonate differently with you.
1. Your Gut Knows When it's Time
You may have a hard time winning new clients. There may be other challenges. If your gut knows that your idea is helpful or valuable, find a way to make it stick. But if your gut can tell that your vision wasn’t that good to begin with, or that you don’t even really care about it anymore, throw in the towel and move on to the next innovation. Stop here. First, you have to train your gut to be honest. Then, you have to listen to it. If you have developed reliable intuition, always go with it.
2. This Business is for the Birds
If your business products and/or services are not growing in two - five years, with no profits and/or revenue after a few years, then you should throw in the towel. Your business has to show some kind of growth, whether it is having more customers, making more money, or getting media attention. If you are in debt and your business is draining your family, friends and investors and you see no way that you are going to generate money to pay these people back, then you need to go out of business.
3. Failure is a Lesson Learned
Success in business can be as much about timing as it is about doing all of the right things. A savvy entrepreneur has a business plan that maps the journey and highlights benchmarks along the way to make sure the business is feasible. When the plan misses every destination along the route, it's time to cancel the trip. A new itinerary is needed. Evaluate at 6 month intervals and adjust to make a profit or close down, regroup and take advantage of a lesson learned.
4. If it's No Longer Fun Move on
We only have one life, so if you find that you are consistently not excited about what you are doing, then it's time to move on and find something else. I've been in business for 9 years and I love what I do. Also, you may want to consider doing something else in addition to your business. For example, you could find a partner that enables you to continue on with your business, while you work a full time job.
5. No Cash? No Passion
If you run out of cash or run out of passion, it's time to give up!
6. Vision Has Vanished
Motivation is the key factor for moving forward. Entrepreneurship requires invention and ability to regard trial and error not as failure, but as a step closer to success. Lack of motivation to explain slow progress, paired with embarrassment or lost confidence, signals the time to move on. Losing excitement about your work and inability to tolerate one more revision of your vision, as it has completely vanished, is the hallmark of time to throw in the towel.
7. Customers Drive that Bus
Don't throw in the towel because you need more funding... or are worn out - 'if' you have an idea that customers are embracing. That's the time to grit your teeth, focus on the future, and practice persistence. However, if your customers are telling you that they won't open their wallets for your product or service - and you've already done everything to re-define your offering to them - bag it. Make sure you don't fall in love with your product/service, unless your customers will as well.
8. Look at the Numbers
When you figure the economics of your business model, the constraints and the reality of the situation, you can easily figure out when you should finally throw in the towel. What type of runway do you have left, 2 weeks? 1 month? 3 months? How can you extend that runway? What can you do to salvage your business? Will anything new work? Basically, you have to free yourself from emotion and think rationally.
9. Loss of Passion
A business owner should either sell the company (if it has intrinsic value) or shut it down (should there be zero marketable value) when they lose the passion and drive to continue operating the business on a daily basis. Regardless of the financial health of the enterprise, all owners reach a point in time where they lose the “fire in the belly”, and this loss of energy, enthusiasm, and enjoyment related to business ownership is extremely difficult to regain.
10. Think and Grow Rich Revisited
As a turnaround manager for a bankruptcy trustee, I was very successful at helping failing businesses to succeed. I frequently saw the realization of an old quote. Napoleon Hill, in his book Think and Grow Rich offered the best advice to entrepreneurs contemplating quitting. "Don't quit until you talk to a professional." In many instances, entrepreneurs are only shy a couple hundred dollars a month to break even. Sometimes, it just takes a new set of eyes to see the way out of a dark place.
11. Biz Making You Sick? Get Out!
Entrepreneurs are a hardy lot - we challenge the odds, work hard for success, and perform introspective exercises before, during and while running our businesses. If you've been running your business and not making good positive headway toward your business goals, that's one thing...but to stay in a situation when it's negatively affecting your physical and/or mental health is self-destructive. Know when to walk away - keep a balance - so you preserve your health and can return to fight again.
12. Quit? Only When You're Dead!
When is it time to quit? Dave Ramsey says it's when you can't take care of your family, and when you can't find a way to make the business take care of your family. But ask yourself - have you done absolutely EVERYTHING - I mean EVERYTHING - to make it succeed? If not, get off your butt and do it! If that gets you outside of a comfort zone, so much the better. I have a friend who will let a business die because he refuses to make cold calls. Don't be that guy! Quit when you're dead.
13. Winners Know When to Quit
Sometimes it takes a winner to know when to quit. How many of us hear Vince Lombardi telling us: "Winning isn't everything, it's the only thing". However, I like the way W.C. Fields puts it better: "If at first you don't succeed, try, try again. Then quit. There's no use being a damn fool about it." If there's no end in sight, your goals aren't going to be reached, you've lost your motivation, or you just don't like the direction you're heading in, then maybe it's time to move on.
14. One Time When It's OK to Quit
Did you know you must be strong to quit? After all, quitting is for the weak, right? WRONG! 10 years I struggled before I faced my own ugly ego and learned it takes courage to quit. Look at your business and sales metrics, pray, be objective and seek counsel. Let go of ego and quit if that's the right thing to do. Don't be pig-headed like I was. Quitting gave me freedom to discover what I'm really passionate about and build a successful company around that. Marry the result, not the business.
15. No Next Big Idea? Quit!
When the business cycle moves the economy down, if you are an entrepreneur and you don't have ready the "next big idea" for your business, you might as well shut the doors and try to get a job. Technology, markets, and competition are changing at such lightning speed these days that an entrepreneur must have a "next big idea" ready at all times to stay afloat. I can vouch for this. My firm is 35 years old and has had at least 7 "new big ideas."
16. The Energy Drain
Businesses begin with a lot of excitement, energy and enthusiasm and when the honeymoon is over, it quickly transitions into hard work, patience and commitment (with a little mix of fun). If YOU have lost your excitement, energy and enthusiasm for your business - MOVE ON! There are plenty of other opportunities out there and it is not worth the frustration to fix something you are not emotionally invested in.
17. No Clear Client = No Results
Even though you may have the BEST WORK or BEST business idea (in your mind), if you can't define the client - who will buy it and why they need it - Give it up. If you have no client need that you're addressing, it will likely fail. It's best to first define your client, identify their gaps and why they need you - then - create a product or service to bridge that gap, not the other way around.
18. The No Return Policy
I think that it's time to throw in the towel with your business when you have consistently made some investments over time with hopes of seeing a return and you continue to get nothing back. If you're making investments and you keep getting less than you put out, but you are getting something, you may want to make some business adjustments. However, if your business has consistently proven to cost you more than it's worth, you may want to consider throwing in the towel and trying something else.
19. Throwing in the Towel
If you've been working at something for at least 18 to 24 months, and you haven't seen revenue or interest, that certainly is the time to say good-bye. If you are doing this as an avocation, and there is interest, enthusiasm and curiosity, but just no dollars, you have to make the decision as to whether you want to continue your own personal investment. Passion is important but remember, the IRS says that if you aren't making money in 3 years, it's a hobby!
20. Once an Entrepreneur...
My firm belief is that a true entrepreneur NEVER quits, NEVER gives up, just ADDS TO...after 31 years as a business owner, I find that I have an amazing array of services to offer others. Had I given up, I never would have diversified, and never would be where I am today.
The most important thing is to know when to give up on SOMEONE ELSE - but never yourself! They will make it abundantly clear to you when it is time to leave them in the dust!
21. To Be or Not to Be
This is a really difficult question and one that each individual must answer for him/herself. For me, it will be time when the flame has been snuffed out completely. By that I mean the passion has died - belief in me and my product are in doubt. For others - If you truly believe you can make it and you are seeing some progress...keep at it. Belief in yourself is huge - but if there is no work coming in at all - or worse yet - no interest - you may need to move on.
22. When to Give Up!
When to close your business is both a personal and business decision. There are many options to try to improve your business financial bottom line, including Six Sigma process improvement, lean methods, working with vendors to negotiate better terms, and bankruptcy reorganization. If your business has taken every possible chance to turn it financially around and had no success, it is likely time to close your business.
23. Calling UNCLE
For those of you with a stubborn streak like me, calling uncle is never easy. I always think there is another way to find a work around or at least tread water until I can figure out a better way.
However, sometimes calling uncle, moving on and spending your energy on something more positive and rewarding is the best thing to do. The telltale sign that it is time to step back and punt is when the problem becomes all encompassing and nothing else seems to matter. Trust me...it ain't so!
24. When to Fold your Cards
The first clue that you are in serious trouble is if you have already been in business one year and you are not making money. You must assess whether you have a competitive advantage or whether you are a "me too" business. If you cannot leverage a competitive advantage in the marketplace, you are a "me too". A "me too" needs to be the low cost supplier in order to compete on price. If you do not have a competitive advantage or are not the low cost supplier, it is time to fold your cards.
25. When it is No Longer Fun!
We go into business for ourselves for many different reasons - we think we have a great idea; we have a passion for our product or service; we want the independence of working for ourselves. I say it is time to give up when it is no longer fun. If your business has the feel of a J.O.B., then go get one and let that 'boss' sweat the payroll and payables and marketing, and inventory; etc. etc.
26. From Crudcakes to Plan B!
If you can answer a solid YES to any of these, then it's time to rebrand, repurpose, or release your business venture:
A) Stopped innovating?
B) Realized that your business model/offering is no longer useful in the current profitable market setting? (eg. typewriter ribbon sales)
C) Noticed a downward trend in usership/purchases and can't think of a remedy for that particular obstacle?
27. If You are Singing the Blues..
If you can't whistle a happy tune & you dread the day, time to move on. If you're not happy, it's impossible for your employees to be happy & impossible to have happy customers. 60% of businesses don’t earn a profit; it's clearly not always money that keeps us going. Networks, purpose, legacy, filling time, & service constitute good reasons to keep going. If your days are longer than they are happy, quit while there is something left to leave. Find a place to sing "Oh What a beautiful Morning".
28. When You're Ready
So, 60% of businesses don't earn profits in their lifetime. Why do we do it? It's a passion. It's opportunity. It's a dream come true. It's our hopes. It's energizing. It's exciting. You throw in the towel when you simply don't view your business this way. When your business doesn't deliver and you're ready to accept that fact, that's when you'll give it up- not a second earlier than when you're ready.
29. Is Your Business a "Grenade"?
Just like on Jersey Shore, when the boys are trying to dump the "grenades" they bring home from the bar as quickly as they can, there comes a time when you have to dump your business if you don't love what you are doing anymore.
I say THAT is when it's time to quit. If your business is not profitable yet, but you do enjoy the challenge & time spent trying to make it profitable, then hang in there until something happens. But if you dread working on it - do yourself a favor and cut it loose.
30. If You're Dying, it's Dying
The day you wake up, feel you're dying, the stress is more than is bearable, and the last thing you want to do is go to work, then it's probably time! Problem solving, dealing with stress, and keeping up the attitude when there seems to be no reason to is the mark of an entrepreneur. This does not mean every day has to be fun and excitement; there are the mundane days and the not so great days and even the devastating days. Yet, being able to pick up, rethink and continue is an absolute! Lose that and you're done!
31. Finding the Heart in Your Art!
It's been said that if you do what you love, the money will follow. What happens if you follow your heart and you arrive at a place nothing like what you envisioned? Sometimes, you need to find another way to live your dream. It's time to find another path when you wake up and it's become a job! Here are two suggestions. Give yourself a timeline to get your passion back and be prepared to shut up shop and move on when that time runs out. There's nothing worse than dying in a place you hate!
32. Business < Goals & Objectives
Your business should be based on Goals & Objectives, both personal and professional. It's more than just profitability. Why are you in business? What is your personal motivation?
Regularly assess how you are doing against your G&Os. If you have three quarters in a row where you are not meeting your G&Os, it's time to seriously reassess. Is this a short-term dip or trend? Five quarters in a row... you should have a change in your business model in process or an exit strategy.
33. Look for the Open Door
When a door closes in front of you, spend little time trying to pry it back open. Rather, look to the right and the left for the best available open door. Chances are good that passing through the open door will lead you down a better path. When you examine the path on the other side of the closed door, often times it was leading to a dead end and the door was closed for a reason.
There are the obvious reasons why a business will fail- a dream but no concrete research, location, product etc. Many businesses fail because partnerships are formed on a basis of friendship, the baggage of which translates poorly into long term working relationships. I had a small gift business with a partner. Her idea of "work" was very different than mine. My understanding of "start-up commitment" clashed with her conception of how many hours a day or week she would work.
Thanks to: Alexandra Clair.
35. Gotta Know When to Fold 'Em
Throwing in the towel must be an individual decision.
As I've been transitioning my consulting business to an online information business, I've done it a few times.
I lost money because I didn't do good due diligence on an internet marketing coach and a PR firm. I pulled the plug and was better off.
I cut the price of an online offer from $397 to $77 and made money as a result.
My best advice is don't quit too soon -- but recognize when something just won't work and get out.
36. When it's Not Fun, You're Done
As long as you're committed to your business and feel passionate about your work, stay with it. Sure, there will be good days and bad. But if you love it, it's worth fighting for, even in difficult times. Call it quits only when you realize you're no longer enjoying the hard work and looking forward to each day. When it's not fun, you're done!
37. Fast "Towel" Exercise
Clear your mind of EVERYTHING. Now "fool your mind" with the following scenario: All businesses/strategies will pay the same & the success rate is the same. This REMOVES factors like worry, money, fear, etc.
Now, think of your existing problem. Will you still pursue this course of action? After all, the success rate is 100%, so why aren't you successful? This is a hard exercise for most people, as they don't want to look at what's really going on. Yet, the answer will ultimately be clear.
38. Ask your Ego
As I went through med school I watched as people dropped out all along the way for many reasons, all "valid" to them. Some even quit during their residency! This being after they fought to get in! It made no sense to me until my 8th year of practice when I had to admit that what I was doing wasn't working on a personal level. I had a great career and no life.
Bottom line; you quit when the pain of your situation is stronger than your ego's ability to tolerate being called a quitter.
39. Don't Beat Yourself Up
Do a personal reality check. If you find yourself despising what you are doing and those closest to you are feeling it and asking you why you bother, you may want to ask yourself the same question. This is not to say that things won't be stressful or challenging at times, especially in the current economic situation. But at some point, you will need to really ask the questions "Is this worth it?" and "Do I really want to do this?" If the answer is no, it may be time to move on.
40. It's Never "OK" to Quit
Entrepreneurs, let's get one thing straight...it's never okay to quit! Hold this firmly in your mind and know that you can stop and start over again, change industries, switch products, and try new things as often as you feel the need, but never quit. If a specific business is "not working out," examine first your intentions. Are you in it just for the money? Save yourself the agony; you are headed for misery. If you are in it to improve the lives of others, keep going...you will never fail.
Steve Gallegos of WhoYa
41. The Best Solution Survives
Ask yourself the following 3 questions: 1) Is the competition's product or service superior to mine? 2) Does it do a better job of solving a problem? 3) Is it a better value? If you answered "yes" to any of these questions, then you either need to improve your product or service FAST or close your doors.
42. Are We Having Fun Yet?
Spare yourself thoughts of sunk costs, fantasy projections, and expert opinions. Answer this question: am I having fun? If not, it might be time to quit. 5 signs it isn’t fun anymore: 1) at 5pm you bail faster than Fred Flintstone from his brontosaurus crane, 2) your industry is in decline, causing a mental overhang, 3) your stress level is high, 4) relationships with people are strained, and 5) it feels like a “job”. Aristotle: “Pleasure in the job puts perfection in the work.”
43. Failure to Plan
Most businesses start on a shoe string and fail to establish their business credit properly. Then, they run into cash flow problems that literally suck the life out of the company. It is essential to separate your business credit and financials from your personal credit and financials. If you did not set the business up properly and you are struggling, you would be better off to close and start over.
44. Emotions Must Not Rule
When starting a business, you have to set a strict limit on the amount of money you are prepared to lose, and a fixed time for the amount of money you want to earn. If you have not done this, you are likely already in trouble. If these three criteria are not met the endeavor MUST be given up immediately. Emotions must not rule your decision.
45. Is it a Business or a Hobby?
My firm, Marketing+, has worked with a number of small business owners over our 16-year history. One of the very first questions I ask in our initial meeting is "Is this your livelihood or is this your hobby?" If you are not willing to spend a minimum of 40 hours a week, develop a marketing plan, commit advertising or promotional funds toward its growth and knock on an endless number of doors I say, save your money...it is a hobby!
46. Entrepreneurs Don't Fade
I've pursued an aviation development business for five years and have had three investor groups drop out on the day of lease signing. I've invested everything I have (and don't have) and still have four very valuable deals waiting for the right investor group. It's not quitting time, but it's parallel movement time for income until the deals find the right partners. It's only time to quit a new business when the opportunity fades; the entrepreneur never fades if the opportunity still has life.
47. Passion Fruit
Passion drives vision...
Vision drives business...
No passion, no vision...
No vision, no business...
48. It's time 2 close the business
...when you run out of money. Capital is crucial in any business.
49. Ask Yourself 3 Key Questions
1. Am I enjoying what I'm doing?
2. Does my business add value to our customers?
3. Do I have an income (from the business or from something else) sufficient to live on?
If so - keep going. If not - on to your next adventure!
50. Can't See Success? Move on!
When your business is struggling and your passion is fading, try to imagine that your goals are achieved 12 months from now. Can you outline the action steps you need to take in order to achieve your goals? Can you imagine the satisfied customers? Can you see your success? Be honest with yourself in this process and don’t force the visions; just let them naturally come to you. When you can no longer envision the success of your product or service, it’s time to move on!
If your business has been unprofitable for an extended period of time & the only hope for success is fueled by your ego, i.e. you're too embarrassed to call quits - it's time to throw in the towel! Understand & accept the fact that you may advocate your plans & ideas as much as you want & you may even win the argument, but at the end of the day, that does not make your business profitable, so eventually, it's your loss if you let your ego ride over your business sense! Wake up - Give up - Move on!
52. Love it or Leave it
In the beginning, find things you love to do, so in the end, you will stick them out. When you wake up and no longer have the love to do something, it is a sign that you need to sell, bail or move your tail.
53. Say "Uncle" On Your Terms
The decision to call it quits on a business is highly personal. If we consider each new business for what it is--an experiment--the question of when to step out of the lab becomes harder to answer because growing a business can take six months or a lifetime. Ask, "Why am I doing this?" If the answer is, "I don't know," or if you are no longer enthused, parlay your knowledge into something new. Hanging on for the sake of seeing it through just isn't smart. After all, this is business.
54. Throw in the Towel? Not Today
After you have tried every idea you have to make it work.
After you have lost your passion for what you are doing.
The pundits wrote off the Rolling Stones as a passing sensation and one had the unmitigated gall to say: You’ll look funny when you’re fifty. They’re now in their late sixties and can still pack any arena. If you have a good idea and have passion for it, never quit. If you can’t do that, here’s a one-way ticket back to the servitude of Corporate America for you.
55. Passion… the Underlying Factor
I would have to say it depends. The numbers can tell you that a company is failing or not, if you are not meeting your break-even numbers and you are continuing to have negative Profit and Loss. However, numbers cannot take into account Passion. If the Passion is there, there are always options. You can work with a coach to help modify the business, reduce costs, or increase sales. Thus, numbers tell facts, but passion is the underlying factor.
Do you know another way that wasn’t included? If you do, please share it below. And as always, many thanks to everyone who contributed to this article!