Nobody wants to talk about it, but… should you quit?
In this episode, Grace explains the two ways to approach every business decision and 4 ways to face a difficult problem (based on a famous song by Kenny Rogers!)
WWB 004: How to Tell if It’s Time to Quit [Podcast]
05/07/2020 – 14 minutes 39 seconds
Highlights and Take-Aways
If it sounds too good to be true, it probably is.
A classic song by Kenny Rogers is The Gambler.
Here’s the chorus:
You got to know
When to hold ’em,
Know when to fold ’em
Know when to walk away,
Know when to run.
You never count your money
When you’re sittin’ at the table;
There’ll be time enough for countin’
When the dealing’s done.
Business owners put a lot of time, money, energy, and effort into creating their “baby.” They started from nothing, and it has taken years to build into something amazing. When problems appear, it can be really hard to look at it objectively and decide to stop. Their options are to:
- Sell it
- Hand it off to someone else
- Liquidate the assets
- Close the doors
I’m dedicating this episode to business owners I’ve known who made the tough choice to quit.
Quitting is not necessarily a sign of defeat, although it can feel that way. Sometimes quitting your business could be a very risk intelligent decision that is for the best.
In the game of poker, the player has to decide what to do based on:
- the emotion (trying not to react to the hand they’re dealt) and
- the facts about how each card can be played.
Running a business has the same two factors: When faced with insurmountable problems, it’s important to understand your emotional response to it, as well as the data to decide whether this is a good time to stop.
Obviously, this entire conversation is super emotional. What business owner wants to quit? Even if you’re selling and making a profit, you may find it difficult to leave it to someone else. You may feel sadness, grief, and even anger about how things have played out.
That’s the point of this of this podcast: Topics that are hard to discuss when it comes to business decision-making.
Know When to Hold ‘Em
The first option in The Gambler is to “hold ‘em”; when your situation is good enough to keep going and which could help you “win the game.” In Poker, you don’t want to signal that you have good or bad cards (a “Poker face”), and you fake a high level of confidence or keep the other players guessing with a lack of emotion.
In a business, knowing when to “hold ‘em” happens when you decide you can generate enough profit that you’ll be able to overcome the challenges you are facing. There are enough “good cards” that you’ll be able to keep moving forward. Successful business owners can separate their emotion from being tied to an ideal outcome, and counter it with the data that shows whether they are profitable or not.
In some cases, there’s a chance that even in a bad quarter you can find a way to get new clients. That’s an option, but it should not be based solely on a good feeling; your decision should be based on data.
Know When to Fold ‘Em
In the game of Poker, this decision happens when you realize your hand isn’t good enough to beat the other players and win. You can weigh the consequences of continuing to play (and losing what you’ve already put into the game) against the possibility of winning with a mediocre hand.
In business, you would “fold ‘em” if you decide to get out, as you would with a stock that’s crashing. This is the point where a lot of owners get scared and confused about what to do. It’s common to Freeze and not make strategic decisions, in the hope that things will get better. But when we take emotions out of it and look at the numbers, this may not be the best choice. Closing a business before it completely crashes is sometimes the best choice. It all depends on the finances.
Taking the emotion out of decision-making is really hard, but that’s the best way to decide whether to “fold”: sell, give up assets, close the doors.
Know When to Walk Away
Obviously, you can’t just abandon your business while it still has value; that would be super irresponsible. But I think it’s a great insight into how to treat business decision-making.
Walking away is a great option for new business opportunities. In the current climate, with a volatile economy and in response to feeling terrified about what will happen next, “opportunities” are going to spring up. We’ve already seen “no-fail investments,” “cutting-edge technology,” and “life-changing offers” that are “guaranteed to double your profits!”
As the saying goes,
If it sounds too good to be true, it probably is.
Very few investments will actually create the massive profit that is promised. Walking away could be the best thing to do. This also applies to partnerships, especially 50/50 deals where there’s a confusing division of responsibility and financial return.
I also caution owners from embarking on additional business streams such as multi-level marketing, direct sales, or anything to do with an investment where you’re required to purchase inventory to resell, under the umbrella of a larger corporation. A lot of people make it look like they are raking in the money from a network marketing “business,” but take a look at the business model before you start.
I’ve written an article that explains the 10 kinds of models including MLM and Pyramid Schemes. Evaluate any new offer and decide whether it’s right for you.
A legitimate opportunity does not require you to invest in something without a clear (and reasonable) return. It should not demand that you front-load inventory or recruit your friends and relatives into joining. You shouldn’t be expected to link your finances with a partner who doesn’t provide every detail of how it will work. A “sure thing” will probably end up costing you more money in the end.
Know When to Run
The final option is to run—obviously this doesn’t mean escaping responsibilities and leaving assets behind; but when it comes to opportunities, some are dangerous.
Logical decisions for expanding your business and adding new lines of service or products can make a lot of sense. Although some business options don’t seem dangerous at first, I believe that multi-level marketing and other models that take advantage of vulnerable people are extremely dangerous, especially if they suck you into cult-like thinking.
I recommend that you be cautious about adding any service or product over which you don’t have full control. Know when to “run away” from opportunities that seem too good to be true.
So… what can you do in a business that is failing? When you’ve tried to turn it around, but things aren’t working out?
My recommendation is to allow yourself to experience both the emotion and the logic.
Emotion could be
- Guilt you feel from past decisions that have “come home to roost”
- Not achieving the dream of building a long-lasting, successful company
- Frustration at things not turning out the way you wanted
- Resentment toward people who aren’t supportive
- Shame that your hard work will be viewed as a failure
- Rejection, ridicule, disrespect
These are all very real fears that we all share as humans; but emotion alone should not affect your decision to keep going, or to quit. Evaluating your emotions is really important, because our feelings drive our decisions. We can’t separate from our emotions. Solid information should drive our decisions, but how we feel about it is also part of the process and shouldn’t be overlooked.
Allow yourself to examine your fears and your reactions to outcomes that you weren’t expecting.
The other side is to really look at the numbers: Quantitative, measurable numbers like:
- What are the profit margins on each service or product type?
- Where are you seeing growth?
- Where do you see loss?
- Who is buying from you, and who is not?
- What kinds of services are getting higher profit margins?
- Which products are purchased at a higher rate? How do these compare to profit?
Your decision to keep your business open or to close it needs to be based on realistic information. It’s important to review the finances with your CFO, financial advisor, and/or accountant. Make sure you look at the numbers comprehensively, but also consider that decisions may be driven by emotion.
Even though closing a company will have an impact beyond just the owner, this should not be the only factor. Once you balance your feelings with what the data is telling you, the decision should be clear. Ultimately, closing could be the best option.
To wrap it up:
- Know when to hold ‘em.
Look for clear signs that there is enough growth potential to continue business operations.
- Know when to fold ‘em.
If there are indicators that your company isn’t likely to succeed, and it would be better to close, you are allowed to “fold” and move on.
- Know when to walk away.
Avoid opportunities that sound too good to be true, because there’s a good chance you won’t get a return on investment.
- Know when to run.
Shady business deals are dangerous, and they can lure you into something that could harm you financially, emotionally, and socially.
That’s it for this episode! Although it’s not a fun topic, I hope it can help you to make risk intelligent decisions about your business—either to adapt and keep moving forward, or to make a difficult choice to close and do something else.
Do you have a question you’d like answered on an upcoming show? Record your message at https://anchor.fm/laconteconsulting/message
Grace LaConte is a business strategist, writer, and workplace equity advocate whose risk management graphics are used around the globe. She specializes in finding hidden threats and opportunities in organizations that employ working parents. Grace is the host of the What’s Wrong with Your Business? Podcast, which provides tools to adapt in a rapidly changing market.