Here are a few simple steps to determine if you should pull the plug on your startup.
You did it. You finally launched a business, or started writing that book, or took that job with the company you were thrilled to work for. But once the initial thrill wears off, you realize it’s not all it’s cracked up to be. Or maybe things just haven’t gone as expected. Part of you wants to throw in the towel, but another voice urges you to stay the course. After all, quitters never win and winners never quit. Or do they?
According to best-selling author and entrepreneur Seth Godin, they do. In The Dip: A Little Book That Teaches You When to Quit (and When to Stick), Godin argues that winners quit fast, quit often and quit without guilt. Rather than continuing to invest in a sunk cost, winners cut their losses and reinvest their time and energy in another activity that will (hopefully) propel them forward. Just think: Every moment you dedicate to your current venture is a moment you’re not dedicating to another one that might be more profitable, fulfilling or both.
Our rational brain (and Economics 101) tells us to ignore sunk costs, but in reality, that’s easier said than done. Here, a few things to consider when you’re deciding whether it’s time to deploy your parachute.
Related: How to Properly Close Your Business
1. Is it profitable?
The act of quitting is emotionally charged, particularly when you worked so hard to attain a project or position in the first place. Our first instinct is often to blame ourselves — if only we hustled harder or longer, things would be better. This can quickly lead to spirals of self-doubt and shame. These subjective experiences can influence our decision-making, leading us to forge on, against our better judgment, in a fruitless endeavor.
A better approach is to remove the emotions from the equation and crunch the numbers. Put simply, determine whether your current business is profitable.
2. What’s the cost of staying?
Once you figure out whether your current occupation is profitable, also consider what it’s stopping you from doing and the earnings that you’re foregoing there. Let’s say you’re a freelance designer and thinking about starting your own agency. Those gigs might earn you money now, but they also take time away from a potentially more rewarding opportunity.
According to Godin, the choices we make to pursue one activity rather than another can be expensive, like watching Netflix instead of doing something more enriching: “These hours you could have spent reading a book, coaching the local handball team, or giving back to the community, you chose to be watching television,” he writes.
Don’t get me wrong: Not all Netflix sessions are bad. I’d be hardpressed to give up my habit of watching documentaries before bed. But when it begins encroaching on time that might be better spent on something more purposeful, it’s time to get our habits in check. The point is, even if you can’t crunch the numbers precisely, try to have a forward-looking perspective, focusing not just what you’re giving up, but on what you stand to gain.
3. Am I still passionate?
This might be the hardest question. It means going beyond the surface — past how something looks on paper or what people will think — and deciding whether the day-to-day experience still makes you happy. Of course, there will be moments of stress and even pain, like if we’re on a tight deadline or receive a bad review. But at the end of the day, you should feel your heart is still in it.
Tech founder Mark Asquith shared how he quit his first real business just a year after launching. Writing for Entrepreneur, Asquith explained: “The problem was that I’d become disenchanted,after such a short amount of time with what I had been sold on by the books and the success stories of the people I knew who had started their own businesses.”
He had to “really dig deep” to discover what the issue was, but ultimately, it led him to quit and enabled him to launch another, more successful business that very same year.
Research from Northwestern University shows that quitting unattainable goals and refocusing our energy on alternate goals can make us happier, physically healthier and less stressed. It also suggests that an ability to effectively quit an unrealistic goal was beneficial to participants’s physical health because it relieved psychological stress. In other words, both your physical and mental health stand will benefit from being able to identify and detach from unrealistic goals (e.g. rescuing a floundering business or being happy in an unfulfilling job).
Hopefully, you’ll find these tips helpful for making the decision of whether to quit if and when that time comes.