What is the key factor in determining when an entrepreneur should exit a business? Why does this factor matter so much?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC has also launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. Your Creative Juices Are Depleted
Businesses need innovation to survive and thrive, particularly in this era of global competition. Stagnant businesses can easily be elbowed out by their rivals. If you’ve run out of fresh ideas for growing your company, then step away. Let someone else take the helm. Trying to hold on without knowing where to steer your business can run it aground, and you will lose more that way.
Success as an entrepreneur has a huge amount to do with that person as an individual. If your business is failing, but you’re not willing to adjust your pricing or your business model, hire more help, or get out of your comfort zone to improve your business, then quit. Don’t waste any more of your time. The entire journey of an entrepreneur will require adjustments, both big and small.
Usually, when businesses reach a maturity point they should consider an exit. This means there is no path to innovation or profit in their near future. They should also consider exiting when they have established the company to the point where another company can easily acquire it and take over the work.
When you discover that the business is more of an obligation than something that really drives you, it’s time to think about exiting. To succeed as an entrepreneur, you need to be strongly motivated to keep growing and adapting. If this becomes a chore and you’re only going through the motions, you should exit and find something that once again ignites a fire in your belly.
Entrepreneurship is an exercise in mental endurance — a constant battle against the demons of self-doubt and loneliness. No matter how sophisticated your analysis of market conditions, the only thing you can really get to know is yourself. Do you have the emotional energy to continue with enthusiasm? Are you just having a rough week or are you truly “over it?” Therein lies the key.
The main factor to keep in mind is that starting a company takes a very different skill set than running a company. Most people are only good at one or the other. If you believe that your company would be better off with professional managers, then it might be time to exit.
One of the most important factors that keep an entrepreneur going is drive. If you don’t approach work with the same drive or passion that you once did, less than desirable results often enter the picture. Whether it’s a lack of enthusiasm or another project taking precedence, an absence of a will to excel is a good enough indication for an entrepreneur to hand over the reins to someone else.
Any business has its ups and downs. When the ups bring no level of satisfaction or fulfillment, it is time to consider an exit. The rule of thumb is that it is time to move on when you are no longer having fun. When the owners aren’t having fun, the feeling spreads across the organization and a negative spiral ensues. Life is too short to do something that brings you no joy.
If you find that you are constantly playing catch up to competitors or they left you in the dust, maybe it’s time to admit that the product may be better off under the leadership of a new team. This can open up your time to work on another project that may be a better fit with the skills and assets you currently have.
When conflict with other business partners or investors starts to impact the health and wellness of the business, it would be a good time to take the high road, bow out, and let others continue with the direction they wanted to take the business. It usually signals that it is time for you to move onto other ventures.
An entrepreneur must consider what else they want to accomplish. If there are other things on the horizon they want to pursue, this should be a factor that influences a potential exit strategy. Otherwise, they may not put enough of themselves into the business. And, a growing business needs to have the heart and mind of the entrepreneur that started it, or it should be handed over to someone willing to commit to it.