If interest of the principal members of the venture does drift, its important to be realistic about when to pull the plug. Quitting is a word that is anathema to most entrepreneurs, yet a successful entrepreneur must be able to understand when something isn’t working. Investors understand that a start-up venture is a high-risk operation. They’re willing to lose their money, as they know the nature of the investment. What they’re less likely to tolerate, however, is throwing good money after bad. You as a manager of the venture must understand when its time to pull the plug and admit defeat. While this may mean the demise of your venture, it will also allow you to potentially save face with investors.
Understanding when to quit is extremely difficult. While there is no easy answer, the best answer is related to understanding the underlying trends of the business. When trends are headed in a negative direction, its important to spot this immediately. If near term fixes do not address the challenges the business is facing, a larger restructuring may be necessary. If a larger restructuring does not address your fundamental challenges and reverse negative trends, be realistic about your options. Quitting is an option.
While entrepreneurs may view quitting as a sin, understand the larger picture. Is it fair to keep stringing along employees in a venture that is losing traction in the market? Is it fair to keep stringing along investors in a situation that may be impossible to turn around.
Try This: Be respectful of your investors and employees. Are you wasting their time and money on a venture that isn’t working? As important as it is to persevere and fight for success, bear in mind the responsibilities you have to your stakeholders.
Avoid This: Don’t continue to fight a losing battle. Understand trends in your business and acknowledge that if continued negative trends occur, your business might not have what it takes to compete in the market.