Inspired by Geoff Lewis’ article in the Sydney Morning Herald last year*, I got to thinking about the future of a business of mine. I don’t know if it was a lack of sleep or how close to home the article hit, but Lewis’ article got me thinking. I realised that when the chips are down, you need clarity in your thoughts to know when to hold ‘em, as well as when to fold ‘em. This is particularly relevant within the start-up realm, where many companies abide by a ‘never give up’ attitude. It is important to view your business’ situation through the lens of reality. You can start by asking yourself these three questions to gain some clarity:
1. Do you have the right team?
Your people are everything, they will make or break your business. If your team is not optimised for your business, you need to do a reconciliation of what skills your team has and what skills your company requires. This will help you understand which people in your team can be developed, as well as who cannot. As for those situations where you have a team problem that just cannot be fixed, and you are in the world of equal equity or Mexican standoff, you will need to assess how much it will take to fight, and how this will impact you both financially and personally.
2. Are you reaching your targets?
Whether it be financial or otherwise, you need to assess whether your business is hitting your targets. If it isn’t, why not? Know your barriers to entry, and which ones are solvable. Is your value proposition missing the mark? If so, alter it and test it out through trial and error. You can play around with pricing, pilots or free trials. Does your product fit within the market? If all indicators are that there may not be a market fit, get in touch with your target market and find out their wants and needs. You may be able to pivot the product around your findings. However, if your business and its products or services cannot satiate market demands, it may be a result of your concept hitting the ‘wave’ either too early or too late, or your value proposition may not be enduring. If this is the case, you may need to evaluate whether the business is viable.
3. Do you have an exit strategy?
If you don’t have an exit strategy, stop now and think this through. I regularly coach young business entrepreneurs to start with the end in mind. Defining your ideal exit helps you guide your business, through knowing which steps to take to get there. Whether your exit strategy is the sale of your business, an IPO, or hiring a general manager because your business is running smoothly, you need to understand what the end goal is. A defined exit strategy can help you understand whether your business proposition and team members have what it takes to realise your business goals. If they don’t, it may be better to cut your losses now. Asking yourself these tough questions should help you identify the issues, and give you an understanding of if they can be fixed. If there are barriers to entry or people problems you can’t solve, you need to acknowledge this. How do you deal with something which isn’t working without losing your head in the process? Whilst this is hard to face, you can help prepare yourself by thinking about these things:
- There are some things that can be changed, and some things that, no matter how hard you try, just cannot be fixed. Accept that with best efforts you did everything you could.
- Take some time to process what has happened, and learn as much as possible from your experiences. If things went terribly wrong, learn what you can do to avoid history repeating itself. Experience is the most significant upside to failure - it fuels professional growth and learning. There is a reason that many large businesses first hit rock bottom, before growing to be successful.
- Embrace the fact that it takes guts and courage to pursue entrepreneurial ventures. Many people are held back by their fear, and miss exploring some golden business opportunities. Acknowledge your entrepreneurial spirit, and know that your next venture will have a better chance of success.