When to Admit a Startup is a Failure
June 28, 2009 by Stephen Kersey
Filed under Business
If you have a startup business, you should realize from the get-go that the long-term survival of your startup is unlikely, statistically speaking. For every startup idea, very few ever get off the ground and even fewer are still around in five years.
Admitting your startup has failed can be difficult to do, especially if you’ve poured your blood, sweat and tears into the company. But here are a few reasons that should make you consider closing up shop and moving on:
No sign of profits in the horizon
If your company is constantly losing money or simply not producing enough money to warrant the time you spend on it, that’s the main sign that it’s time to admit the startup is a failure. However, be sure to give your startup a fair chance. In the online world, two years is usually the amount of time a startup is given to show some signs of life.
Loss of passion
Most startups are brought into life due to a passion one of the founders has bout the specific field or industry. If that passion disappears, it can be very difficult to keep going. Instead of fighting the feeling, consider selling or closing the startup.
Too much quality competition
If you have direct competition that has a better product that is available for less money, that’s an ominous sign. A good rule of thumb is that if you can’t rationalize why someone should utilize your product or service over the products of your competitors, a new direction is needed.
Self survival
If you are trying to support a family with a startup business and you can’t make ends meet, that is probably a sign that you need to figure out a new plan. You don’t need to necessarily shut down your startup, but harming yourself and your family to chase a startup dream rarely makes sense — especially if the chase has lasted a number of years.
Startup Failure (Image: Flickr)
I can’t say I disagree with any of the above advice. Coming out of college, I tried starting my own business and it went absolutely no where. My parents urged me to get a job at a big company but I told them I just can’t work for anyone but me. My fiance was basically supporting us while I struggled to earn a negative profit. Long story short, I experienced many of the signs you wrote about signaling it was time for me to give up on my business. I decided to take one last shot, but this time, I was going to put in the time and really research what I need to succeed as a young entrepreneur. I came across a bunch of books that actually gave me some really good tips to succeed as a young business starter. It’s been a few years now, but I think one of the books that really helped was called something like Young Guns. Anyway, what I’m trying to say is, if you’re about to throw in the towel, or you just need some help getting your business going, do the due diligence before quitting and maybe try learning a thing or two from people who have been in your shoes and have succeeded.