Sometimes, It’s Best To Quit

Portland Business Journal:

I rarely find inspiration from politics for my advice to business owners. This past month or so is the exception that proves the rule.

What happened this month?

Many presidential campaigns folded their tents as one by one, the candidates quit the race. A few months ago, presidential candidates filled wide TV debate stages. Now, it’s a one-on-one race in each party.

Likewise, many businesses fail each year. Others are sold. You read about a few in the newspapers, but for each newsworthy event, thousands occur quietly in good economic times and bad.

Rather than focus on the survivors, I think we can all learn more valuable lessons about business from the candidates who threw in the towel.

Take the Romney campaign. One can imagine discussions that led up to its termination:

Mrs. Romney: “You’ve spent your allowance, Mitt. $35 million is much more than we planned.”

Mitt: “But just a few more million will do it.”

Mrs. Romney: “No.”

Here are some things to focus on when considering whether you should move on as did Mr. Romney.

* Selling a company isn’t the same as losing. Some sales are big wins. Others are smaller victories. Redeploying underperforming assets, yourself included, is usually a good decision. Some people quit. Others move on. One of the best reasons to close or sell a business is that you’ve found something better to do. Businesses take up so much time and energy, there is a lost-opportunity cost of stubbornly sticking around too long.

* Starting a business is difficult, but closing a company is even harder. Closing the right way is even more difficult. This affects many people, and some will fare worse than others. It’s natural to seek to avoid facing tough choices, but postponing the inevitable usually causes greater harm. If it’s inevitable, dealing with it now is always the best choice.

* Campaigns and businesses can be bottomless pits. There’s no sense throwing good money after bad. Funding a lost cause or even a decent business with limited upside potential usually doesn’t make sense. Ask Mrs. Romney. Even multimillionaires have breaking points.

* Every company needs a business justification for additional investments of money, time and effort. Each investment decision needs to be justified like the decision to start the company.

Read more.

Photo by CNN.

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