Like Kenny Rogers says ‘you gotta know when to fold ‘em…’ Chris Edwards, co-founder of Launchpad Australia, explains when to stick with a business venture and when it’s time to move on.
In 2014 were you rocking an Amazon Fire phone in your back pocket? Didn’t think so. It bombed months after launching however Jeff Bezos took the $170 million loss on the chin.
“If you think that’s a big failure, we’re working on much bigger failures right now,” he said when quizzed about the phone’s epic flop.
He’s not joking. Bezos estimates he’s lost billions in failing enterprises such as Crucible, LivingSocial and Pets.com.
I say this without a skerrick of judgement. Failure is fundamental to growth and each one is a building block to success. Entrepreneurs should be innovating fast and failing faster.
As one of my mentors, Australian new media entrepreneur Tim Duggan says, ‘The line between success and failure is razor thin.’
Over the years, he’s been incredibly candid about almost losing his company, maintaining solvency down to the dollar and the associated mental toll this takes as a business owner.
The takeaway is, we need to respect those who have tried and failed as much as those who have ‘won’.
However, it can be hard to know if you should pull the plug or persevere. After all, Colonel Sanders was knocked back by over 1,000 restaurants before one agreed to sell his now world-famous chicken.
Consider the following if you’re walking the razor-thin line between success and failure.
What’s the market saying?
Companies don’t exist in a vacuum; everyone has competitors. What’s going on with yours?
Is everyone having the same issue or is it just you?
Check your competitors’ pulse regularly to assess the current health and future prospects of your category. Keep abreast of business news, trend reports and follow LinkedIn thought-leaders.
Surround yourself with a community that is obsessive over the macro and micro environments. Spend time considering “what are the opportunities here?” and “how can my business capitalise on these new needs, changes and trends?”
You might find you just need to make some tweaks to your offering or it might be the motivation to jump before you’re pushed.
And before I hear cries of ‘Competitors? I’m the first mover!’, remember the first to market is often the first to fail. If you’re spending too much time educating a green market, your time, effort, and money are likely to result in a load of sunk costs.
What are your finances saying?
Numbers don’t lie. If you’re bleeding cash month after month, have a lack of loyal customers or consistently prioritise profit over sales, consider this a warning.
First up, nothing will kill your business faster than inconsistent cash flow. Feast and famine is no way to run a business with any sense of longevity.
If you’ve tried, and failed, to fix your cash flow, reconsider your options before you find yourself digging yourself out of an even bigger financial hole.
Also, take a look at your pricing strategy. If your customers are happily handing over their hard-earned dollars, it’s an indicator of success.
Conversely, if you’re constantly incentivising purchases through too many freebies, incentives or offers, it’s a race to the bottom.
Streaming giants Netflix and Disney+ are both good examples of pivoting the pricing model.
Facing reduced revenue as a result of increased consumer choice, they’ve both announced pivots to an AVOD (advertising-based video-on-demand) model. Its long-term success remains to be seen but it’s a good example of listening to the market and adjusting pricing accordingly.
What’s your heart (and your ego) saying?
Sometimes we simply fall out of love with our businesses. This is ok.
Your reasons for starting it in the first place may no longer align with your values or life’s priorities and goals may have shifted.
You only have one life and no one’s winning any medals for pouring their heart and soul into a business they don’t care about.
Similarly, don’t hold onto a failing venture because your ego won’t let you quit. Stay too long at the casino and you risk gambling all your money away.
Instead, tune into the reasons why you’re avoiding making the hard decisions about your business. If you’re being driven by ego, it means common sense has taken its hand off the wheel and you’re at risk of careening into trouble.
Dedication to shut up shop is often a painful process. You may have to let employees go, employees who have also poured their heart and soul into the business.
And like the end of any long-term relationship, there’s a profound sense of defeat and grief.
But any true entrepreneur knows that sad endings are opportunities for new beginnings.
Only this time, you’ll be armed with the necessary lessons next time you join the entrepreneurial roller coaster.
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Chris is a serial entrepreneur having started her first business in 2008 at 28 years of age — a lifestyle media platform: Honeycombers. Honeycombers is now the go-to lifestyle resource for locals, expats and tourists alike across Singapore, Hong Kong and Bali and has over one million unique readers every month.
Chris’s most recent business is Launchpad; an entrepreneurial community network for ethics-led businesses. Launchpad is designed to help small businesses thrive through community, mentoring and coaching and today has over 500 members from across 6 countries. Chris now runs four companies across four countries and hosts a weekly podcast called Good Business where she interviews impact-led founders.