When it's wrong to hang on

IT IS well documented that famous entrepreneur Richard Branson had a string of unsuccessful ventures and outright failures on his journey to building the empire that is Virgin today. 

What makes his story so compelling is that he was able to recognise when to push on with a business concept or idea, and when to put it aside and start something else. 

This ability to see the wood for the trees seems to be a common trait among many successful entrepreneurs, and yet we are often taught differently. 

We are told to persevere, to hang in there, to vasbyt. But when does it become a mistake to carry on? At what point do we need to accept that our business in its current form is just not working, and that we have two choices: either make wholesale changes, or close up shop and start again? 

The latter option is one of the most difficult, and bravest, moves an entrepreneur can ever make. 

Before I continue, let me just clarify what I mean by the business "not working". I am not referring to a few bad months, or a slight dip in sales year-on-year. These cycles are natural in any business and just as you will have boom times, so too will you face lean and difficult ones. 

Similarly, I am also not talking about a fairly new venture – almost all business ideas and concepts take a while to get off the ground, up to three years in some cases, and you do need to be prepared to give the business a proper chance at success before moving on. 

What I am talking about is a scenario in which you have poured time, money and energy into the business, tried different strategies, products and approaches, done the shows, developed the website, ticked all the boxes and yet have not seen a return on your investment, despite your best efforts. 

I am talking about a business that is three or four years old, or even older, that makes no money or worse, costs money to keep afloat. 

Would you work for free? 

So how do you recognise when it is time for a change? Well, there are a number of alarm bells and red flags that usually indicate that things are not kosher.

Firstly, ask yourself why you started your own business in the first place – chances are it was a combination of the freedom to be creative and be your own boss, and also the prospect of financial freedom and success. 

I doubt very much it was so that you could work yourself to the bone to pay salaries to everyone – staff, suppliers, subcontractors - but yourself. I also doubt it was so that you could pour your life savings into the business, borrow more money and end up stressed out and deeply in debt several years down the line, with no end in sight. 

If this sounds familiar, you need to ask yourself: “Would I work for free for somebody else?” Of course you wouldn't, so why are you doing it for yourself? Again, let me not create the impression that you should throw in the towel at the first sign of adversity. 

Like anything of value, creating a successful business takes time and effort, and it will often be necessary to borrow money, draw very little out for yourself and make real sacrifices when getting things off the ground.

However, if you are still in that same position four or five years down the line, something is not working. 

Only you can answer these questions, but the simple fact is that your business should be working for you, and not the other way around.

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2013-01-17 10:17