Riddell: Knowing when to ‘fold’em’: When startups don’t make it
Not Business as Usual
It is an unfortunate fact of life but the vast majority of entrepreneurial start ups simply do not make it. Indeed, some statistics indicate that as many as eighty per cent will fail within their first five years. While these may provide an insight into the difficult realities of the marketplace, they hardly do justice to the courage, bravery, commitment, and energy of those entrepreneurs who fail. While American business history highlights and champions those failures who picked themselves up, dusted themselves off, and then went on to greater heights, again this will not be the case for the overwhelming majority.
So as a small business owner/entrepreneur how do you recognize the difference between a temporary setback and an event that justifies “throwing in the towel?” While many traditional approaches would suggest cash shortages as the bell weather of demise, others might suggest trend-line analysis, or even technological replacement. Yet I suggest that the single best indicator of the right time to “get out” is much simpler to understand yet perhaps significantly more difficult to recognize and implement.
Entrepreneurship is an endeavor that requires total dedication for success. This total dedication is an integral part of the entrepreneur’s very being. Living, sleeping, and breathing the mission of his or her organization is the very fuel that sustains the true entrepreneur. An almost maniacal focus and belief in the “rightness” of the mission directly contributes to the “missionary conversion” of the marketplace. Small details like a lack of cash or a declining trend have little impact when you are convinced of the righteousness of your cause.
If this sounds a bit similar to a religious connotation, it is not by accident. Great religions were only spread by zealots, those convinced of their rightness. The same is true for great ideas that turn into great companies. Stephen Jobs and Bill Gates have been called many things, some very complimentary, some not. But the word “zealot” still applies to them today.
But some religious zealots and entrepreneurs come to a point of decision. A point where they have to look themselves in the eye and answer one simple question: “Why am I doing this?” Said differently, is the pain, the frustration, the feeling of despair worth all the effort?
If the answer is “yes” then the next day the zealot and the entrepreneur both wake up, treat yesterday’s slights as mere inconveniences, and launch into their day with an enviable optimism and vigor. But if the answer is “no” then no amount of cash infusion, no amount of happy talk, no amount of motivating tapes, books, or CD’s can fix that which is not fixable. The key is to honestly recognize this state, accept it for what it is, and then take control of the actions to move to a new state—and do it with a clear conscience that says an unsuccessful startup business is not a failure of personal morality. It is merely a failure of a business.
Following a successful international business career, John Riddell turned his attention to small business/entrepreneurial pursuits that included corporate turn-arounds, start-ups, teaching as an adjunct business school professor, authoring noted business and sports columns, and serving as VP for the Chattanooga Chamber of Commerce directing its Center for Entrepreneurial Growth. He can be contacted at email@example.com.
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