There's lots written about the glory of failing. That's crap. Winning is more fun. So since that's true, and since you're a driven, persistent entrepreneur who runs at cliffs, it can be tough to know when to quit. The higher rates of suicide, depression, and divorce among entrepreneurs underscore this point. One study concluded 49% of entrepreneurs have a mental health disorder. Since perception isn't always reality if you're an entrepreneur, when do you know when to quit? Here are some considerations.
1. Is it a healthy fail?
Are you still growing as a human being? If so, this difficult situation may be the best formative thing that's ever happened. Shift the conversation from "failing" to things being discovered in the process. Ask yourself what you're learning. Failure can be famously rewarding for all kinds of reasons that aren't financial. A healthy fail has identifiable benefits you can explore and know why you're persisting. You can even write them down. You can tell a healthy failing by how excited you are about the process and the learnings, even in the face of little functional progress.
I think back to going to night school for my MBA, working full time, and really bombing my first finance class at the University of Texas. I had to go in front of the academic board to get permission to retake it. I plowed through my retake with a steely determination this stuff wasn't going to beat me. That grit gave way to a lot of grinning when I realized how much finance could help me. I ended up liking it so much that not only did I make it my focus in grad school (quantitative stat), but I ended up starting a company in finance, Valor Ventures. You never know.
2. Is it a functional fail?
Most entrepreneurs give up only when forced to. Often the money runs out, and "they have to go get a real job." This functional fail isn't anything to be afraid of. It's a clean end. To help yourself get to a clean end if needed, try not to take on too much debt or equity. There should be reasonable financial risks relative to the business performance along the way so that doesn't happen.
Not only that, have a point at which are you going to stop the bleed on your personal financial sustainability. I have a friend--let's call him Jeb--who counseled me to save a bit back when I launched my last business, rather than the cash-in-the-retirement approach I had been outlining. He was right. You can set a number you won't go below and call that an end, too. Set healthy boundaries on what you allow your business to do to your life and health.
3. Is it a subprocess fail?
There are some sub-types of failing that have common solutions--and by common I don't mean easy. If you are in these traps, seek help by asking other entrepreneurs, at a minimum, for their solutions and support:
a. A market fail. The market doesn't need this. It keeps telling you, and you know, because you can track the answer. And it's no. This can't be fixed, but the product could potentially be evolved by listening to what customers do want. A no to you is a yes to something else--what is that something else?
b. A marketing fail. A marketing fail is when you have no clue what the market thinks about your solution because you haven't been able to repeatably, reliably, create a process to market. Even 10 calls a day with notepaper notes is a process. Repeatable, reliable, tracked marketing is a critical part of knowing if the business is failing, or if it's a matter of the business failing because a critical business sub-process is failing. A business coach or mentor can help you see your blind spots. Is it really as easy as it can be to do business with you, from a transactional standpoint?
c. Team fail. There are great teams out there that aren't quite complete. Are you missing a person/perspective that you could add? Solo founders in particular face this issue and it can be hard to see. Entrepreneur friends help other entrepreneurs find their partners. You can be the right person, but be just one other right person short of a winning set. Make sure you have advisors around you who can help round out a winning team.
Speaking of friends...
I sat down with an entrepreneur who wrapped up his software business last week. Brilliant guy. His eyes filled with tears--but his face was full of light. He's being recruited in some great places, which is making his landing a lot easier. I could see his warming excitement for those new beginnings, too.
As he walked away from me, I wondered what more I could have done for him, and realized actually--listening was indeed what he had wanted. If you're the entrepreneur, going to founder friends who can listen without judging is an empowering thing to do. Knowing my friends still like me, even when I'm failing, recharges my emotional batteries. I'm back in the fight faster.
My favorite failure quote, predictably, is not about failing.
It is the popular one often attributed to Gandhi that goes like this, "First they ignore you. Then they laugh at you. Then they fight you. Then you win."
The fact is, failure is hard to diagnose from the outside because all entrepreneurs are building things that the market doesn't know it needs (yet). All entrepreneurs tend to feel they are failing, too--relative to their own very high ambitions. You can't tell from the outside if you're looking at a win-in-process or a total fail. It's important to distinguish a business failure, which is not totally in any one person's control no matter how control-freakish entrepreneurs are, from a personal failure. You're not a failure because your business didn't fly. You may very well be in the middle of growing as a leader, even as business metrics skew south.
That's why you can be slow to call it quits unless you truly see symptoms that write "unhealthy" on the wall in big red letters--like chronic depression, alcoholism, emotional disturbance and the like. The overall stats about true business failure today aren't terrifying--1/3 of small businesses make it for 10 years or more.
What it comes down to is, is this good for you right now?
Is it making you better, personally? Are you learning something you love to learn? Are your relationships building and thriving around it? And if you know it is, then go boldly and share the joys of the learning. If it is destroying you, crushing your soul, killing your relationships, creating broken promises--then it's time to reach out and step out. Who knows what you can do next, now that you've tested some of the limits? Just get a little rest and recovery first.