And now, for something completely different. I don’t want you to persevere. In the November 2014 edition of The Strategy Session (Alberta Venture), I get Oliver Baezner, the former Vice-President of Sales & Marketing for Big Rock Brewery and now principal of Sonic Breakthrough Coaching, and Nagui Bihelek, President and CEO of Business Edge Coaching Inc. to teach you how to quit.
UNEDITED TEXT BELOW
Strategy Session: The Courage to Quit
By Marzena Czarnecka
Today, I want you to tell me the secret to your success—and then, I’m going to tell you that within it hide the seeds of your most spectacular failures. Ready? Sitting down? Drink in hand?
What’s your superpower? No, actually, you don’t even have to tell me. I know. If you define at all as a business person, be you the CEO of a multi-national mega-giant poised to take over the world or the I-Do-Everything-Myself owner-operator of a one-person shop, you credit your success, past, present and future, to… perseverance. You never give up. You just keep on trying. You fall over a hundred times—you just pick yourself up and try one more time. And then another.
Laudable. Or—bear with me a minute, keep an open mind—stupid?
Now, don’t get me wrong—I absolutely agree with the conventional wisdom that success requires perseverance, sometimes such teeth-grinding perseverance that most humans can’t even conceive of, let alone execute on (that’s what makes Homo sapiens entreprenueriatis a category of its own). But this strength is also entrepreneurs’ greatest weakness: their Kryptonite. Indoctrinated to never quit, they fail to develop the equally critical skills to know when to give up—on a project, a product, a partner, a joint-venture, a client, a strategy… the entire business.
And so, they fail. Spectacularly.
“Business owners can be relentless,” says Oliver Baezner, former Vice-President of Sales & Marketing for Big Rock Brewery and now principal of Sonic Breakthrough Coaching. “They want to persevere and push through.” Anything. Everything. Business Edge Coaching Inc.’s President and CEO Nagui Bihelek agrees. “For business owners who have been in the game for a long time, what often defines them is that ‘don’t quit ‘attitude. They think, there’s always another way, there’s always another door.”
But that’s not always the smart—or successful—thing to do.
Ponder this, and it will change your life: Successful entrepreneurs are not the entrepreneurs who push through and persevere past the point of exhaustion of all their financial, emotional and other resources. They’re the ones who know when to stop, reassess and redeploy—themselves, their (and their investors’) capital—well before hitting rock bottom.
Now, before I tell you how to hone your quitting skills, Baezner and Bihulek want to tell you how to identify the symptoms that it might be time to take a walk. For Baezner, the qualitative variable and the subjective question you need to ask yourself is this: “Do I still have the passion for this business?”
“if there is no passion left, it’s time to reignite or pull the plug,” says Baezner. For your sanity—and the good of everyone else involved. Your partner, the one who’s still on fire? You’re dragging him down, man. Your employees? They know you’re dialing it in—so why should they go full out? Your clients? They see you’re halfway out the door—and so are they. Exit. And let those with passion take over.
(An exit, by the way, can be so many things: a succession plan, for example, or a sale that finances your next venture—about which you’re still passionate. It is not, my sweet, giving up, giving in, failing. It’s change, and you’re the change agent. More on that in a bit.)
But passion’s not enough. You know it, I know it: it’s good for getting things started, but it’s not the metric that should determine whether you stay or go. That metric is the unromantic but ever-so-reliable… financial statement.
“Your financial statements are the report card for any business,” says Baezner. If your financial statements are showing you your profitability is nil, your cash flow sucks, and you have no liquidity… and it’s been like that for five years… how much uglier do you need it to get before you start making your tough decisions?
So you’re sitting there, scowling at me and carefully not looking for your financial statements, because you know they’re… well, not pretty. But hell. They used to be! Your business was on the up-and-up, the ball was rolling, the clients were calling, and now what?
“One of the circumstances we see most often with clients who are struggling is that the industry has changed, and their business has not,” says Bihelek. You used to be unique, and your margins rocked. “Now people can get that product or service anywhere and they can get it cheap. Your ability to be competitive has shifted from offering a unique set of products with a unique selling proposition to just a price war. And odds are you can’t compete on price.”
You can try, of course. But unless you’ve got economies of scale on your side… yeah. No. Don’t.
Quit. Exit. You know it’s the right thing to do.
What? Right. Big boys don’t cry. Entrepreneurs don’t give up. Being a failure stinks.
OK, babe. Come here. Cuddle up and listen, carefully. Quitting—consciously, purposefully, with a view to minimizing past losses and maximizing future opportunities? That’s not failure. That’s what the big fish do. They don’t spend $15 billion on something that looks unviable just because they’ve already put $5 billion down that hole. They don’t finish that upgrader just because they started it if it no longer makes sense. They pull out of their Sudan plays, because, Christ, enough already. They realize they are not going to get that gold mine in that lawless part of South America to pay. They walk away from the supplier they’ve been with for 10 years when he stops being able to deliver; they terminate the joint venture that’s losing them money. They close down unprofitable operations.
Ruthlessly, constantly, consistently.
(D’you know who decides to spent another $10 million on something that’s not going to work, because they’ve already put $2 million down that hole? Governments. Don’t think like a bureaucrat or politician, ok? You’re better than that.)
Now—I’m not going to make you quit alone. Of course not. Because I don’t want you to do it in the heat of passion, anger, despair. I want you to quit after a thoughtful, detached, rational analysis. No, don’t call your accountant. OK, fine—call her, to get your most recent numbers and your historical numbers. But that’s all she’s good for. Here’s what she doesn’t know: she doesn’t know your market, your industry, your strategies, failed, successful, past and present. Get a professional who specializes in making hard calls on projects and ventures, preferably in your industry.
“That’s the key in knowing when and how to pull the plug,” says Baezner. “Get that outside perspective from somebody who’s not stuck in the same forest you’re stuck in. Somebody who doesn’t have the blinders on and who can ask the tough questions.” Such as—you’re working 100 hours a week for yourself so you don’t have to work 40 hours a week for someone else. And you’re really clearing about $6.50 an hour. Is it worth it?
Maybe it is. It probably isn’t…
And, as Baezner stresses, the strategic analysis and decision to quit doing that thing that’s not making you any money (and giving you ulcers, heart problems, and paving the way to your third divorce along the way) may not be about pulling the plug on your life as an entrepreneur. “It may be simply about pulling the plug on the type of product you’re selling,” he says. “Or, the type of business you’re in.” Maybe your career in oil and gas service has run its course and it’s time to try… something entirely different.
There’s one other person I want you to call in addition to the hard-ass, hard-core analyst-strategist-turnaround-CEO-for-hire. You’re gonna hate this one. Ready? Call a therapist. Don’t squirm. Do it. Exiting from a venture that’s grown to define you-be-you is going to hurt. A lot. Someone’s gotta to hold your hand and help you work through the pain. Remind you that you’re not your business. Help you figure out who you are without your business… and how you’re going to run your next one in a smarter, healthier, “know when to quit before you crash” kind of way.
What? Does it feel good, to quit? No. Absolutely not. It’s the single most terrifying thing you will ever do, and it requires way more courage than starting.
But I believe in you. You can do it.
Quit. When it’s the right thing to do.
Marzena Czarnecka is a Calgary-based business and legal affairs writer. She can be reached at firstname.lastname@example.org, stalked at @paddleink on Twitter, and visited at CalgaryBusinessWriter.com.
READ A LITTLE, LEARN A LOT
Trainingcraft’s Rob “Spider” Graham on The Art of Giving Up (even though you’ve been taught to never, ever surrender)
Psychology Today’s Dr. Raj Raghunathan on Sapient Nature: The Art of Giving Up