When do you know it's time to pull out, and cut your losses/earnings off?


5

Sometimes the hardest thing to do is cut-bait, and walk away from a venture. What factors are the most important taking this leap?

Venture Investment Selling

asked Oct 16 '10 at 06:03
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Blunders .
899 points
  • Great question. My wife is asking me the same thing... Technically my partner and I have a great product. No sales though. – Tim J 7 years ago
  • **@Tim:** All depends on how you see it, and the how invested you are in the relationship... :-) ...did make me laugh though. – Blunders . 7 years ago
  • any follow-up on how you decided to proceed? – Patrickgamer 7 years ago
  • @patrickgamer: It's complex... :-) ...but no, I've decided to hold off until earlier next year for now. – Blunders . 7 years ago
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2 Answers


3

In your specific situation, is the issue that your operations are a money-sink? Or just that there are compounding stresses driving you out?

I'm struggling with that very issue, so I really can't give an "answer", but I can tell you the factors I'm weighing when looking at the decision for myself:

  1. Time - I work a day job on top of working to get my business off the ground, and as a result, the first always takes precedence over the second. This means when I work a 60h week at the office, I've got little to no time to develop my business. That means I also have very little time for myself or to spend with my family. Where this becomes a factor (we all know we're going to make sacrifices when we started!) is the return on my 'sweat equity'. If the potential earnings don't line up with my I'm making at my day job, I have to wonder if it's worth my time to persue.
  2. Hard investments - Not just money; anything that cost me money at some time (such as old computers as servers, the USB drives here and there, and all the sub $50 expenses you don't really think about can add up. In my case, it's mostly stuff that I was going to throw away, but I did spend money on dev servers and PM software. How much more will I be putting into the venture before I start seeing returns. More importantly, what is the ongoing net loss in hard investments on a monthly basis, and what is the direct impact on my quality of life. Right now, that's
  3. Passion & Enjoyment - The single most important factor for me at my point in life right now (I'm turning 31 in 1.5 weeks) is quality of life. I'm not prepared to be slaving over work for myself for a postponed return. If it's something I love to do, it's not slave work - it's an enjoyable means of making money. Unfortunately, my venture is not a particular passion, and was more of a strategic utilization of skills I developed in my career history.

I haven't made up my mind on what I'm going to do, since the one big client I have have already been abandoned by another development group and I don't want to leave them in the lurch. I'm currently focusing my efforts on ways of making my operations more hands-off and automated so that I can continue doing business with lower margins as a compromise to closing shop altogether.

I'm definitely interested in learning if there are any hard and fast rules by which this kind of decision is made by more seasoned business owners...

I guess it would help to know more about the motivations for leaving, and maybe some motivations you had for getting started in the first place.

answered Oct 16 '10 at 06:25
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Patrickgamer
234 points
  • **@patrickgamer:** Nice answer, best of luck! – Blunders . 7 years ago
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1

I highly recommend Seth Godin's book The Dip on this very topic.

answered Oct 16 '10 at 12:23
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Mitch
659 points

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