I am running a startup. Just my co-founder and me (Hi, Irene!) . And by jove, we have to be positive! After all, we are not seeing much revenue coming in at the moment, and we are constantly testing new ideas, new marketing slants, new messages. These take time to bite and all the while, we are sitting pretty with no income. You see, we don't pay ourselves a single cent, but earn a share of the profits at the end of the year; and that's looking very much like it might not be able to buy me more than a pint of ale in the pub down the street! (I exaggerate, but you know what I mean, don't you?) And all the while I have a family of 8 to maintain, and Irene has two teenage daughters. Now, how's that for a scary thought? Yet amidst all this, we remain upbeat and plug away, believing that we have a value proposition that customers might identify with, and will hand some of their money to us. So the key to remaining sane is to continue being positive. So it will come as a surprise to some that I would be asking,
"Can there be TOO much positivity?"
Which is worse, holding out for much longer, or giving up much sooner, than one should?
I chanced upon a positive note on Facebook which I replicate here. You can visit the originators' Facebook page by clicking on the picture.
You must admit that this is a pretty uplifting message, right? After all, how many businesses, executives, careers have failed because they didn't hang in there long enough? But have you ever wondered.... how long am I expected to hang on? When is it time for me to move on? After all, there are some things in life that are not meant to be, and perhaps this is one of them? By holding on, by never giving up, am I prolonging the inevitable? Am I in denial? Or, worse, am I being irresponsible?
These questions will keep bugging a startup entrepreneur because he is constantly trying to make the market, and if he has not the means to hold out, or to test the hypotheses, he will very quickly run into a wall of doubt, and then decide to throw in the towel when he may be tentalisingly close to success. But which is worse, holding out for much longer than one should, or giving up much sooner than one should?
On the face of it, it looks like a simple answer, it is worse to give up sooner because nirvana could well be around the corner! Yet, understand this: holding out means that you may be spending more money needlessly, running a fool's errand. It also means that you may be wasting resources that could be better utilised somewhere else. There is always an opportunity cost to holding out. And by the time you have realised it was too late, you don't have enough to start something new.
So, when is it time to give up?
In this article, I share the 6 C's from personal experiences to answer this question, and to make it more logical, to have a hard answer to the question of, "When is it time for me to move on?"
Count your pennies
The first thing one needs to do when one starts an entrepreneurial journey is to count the pennies. Know how much you have in the kitty and how long it takes to sign the first client. If you estimate that it will take 6 months to find your first client, then triple it, and see if you have the wherewithal to maintain an income-free period of 18 months. 18 months?? I thought we just established it would take about 6 months? Well, according to systems science research, we are woefully poor in estimating how long it takes for an outcome to kick in. In fact, we usually miss time lines by a factor of three. So, to be sure, get your money ready for 18 months of uncertainty. If you can cut down the estimate for your first client, you can also cut down the financial buffer. But don't kid yourself. If you can't make it, you can't make it. Better to acknowledge that in the beginning than to scramble for funds just as you go to market, or worse, find you don't have any more juice and have to close down!
Call for backup
When you seek external funding, you are in essence calling for backup. But what you don't want to do is to seek too much funding. If you can find someone to back you up, it does take the weight off you a little; but the story doesn't end there. This is because your job is to get clients, not investors. The more investors you bring in, the more stress you lay on yourself to try to meet their needs as well as the business' needs. As a startup entrepreneur, you can either get funding for yourself, or for the business. No investor would ever fund you, but family and friends can. When you are self-funded, it means that every dollar that goes into the company and be reinvested into it to make more money. If you have to pull out some of the funds to keep you going, very soon, you will find the business running out of money. Reinvesting is important, and you need to ensure that you can do that by ensuring that your personal backyard is safe. So, if you have to, call for backup.
Create something to "die for"
When you are starting up, you are essentially selling your personal future to build the company's future. After all, you are betting your current income, career, and corporate experience, for something that is unknown and untested. So you are basically putting your future on the line here. In return, you will need to have something of value to trade your future for. This something-of-value must have such a compelling proposition that customers are willing to bet on you. If no one can see the value in what you create except you, then you don't have anything, and basically, you will be dying for nothing. You must create something that will make your "death" so much more rewarding. And by "death", I am not referring to the physical departure of this earth; I am referring to the death of your future, the corporate you. If you cannot bank on the value that you are creating, you might well be digging your own grave. In this case, better to stay where you are now and don't venture out. Then you stay positive about other aspects of your life.
Construct an easy-to-navigate path
The path towards success is never easy, but it is also not impossible. You need to create a path that is easy for you to negotiate and journey down. The first thing to do is to identify your milestones. Your first product to market, your first client, your next client, your first $10K, your next $50K, your next product, etc. This path will help you be judicious with your money. If you find that you are spending too much time in one sector, it means that you need to throw in a kicker; perhaps get someone else on board, or to partner with another company who is already there. Don't try to bite off more than you can chew, and don't try to slay the dragon all by yourself. Construct a path that is easy for you to navigate on, and walk the terrain as simply as possible.
Cross, or avoid, the chasm
But what if your path leads to a chasm? What if your plan brought you to a big ravine in front of you? What do you do now? Well, you could deploy more resources to cross the chasm, hoping that it would lead to the Promised Land, or you could build a new path. Crossing the chasm would celebrate your doggedness, and it would show that you are an astute businessperson, to have been able to identify business opportunities when no one has seen it before. This will be the stuff of legends, and if you believe you are on that track, then do find ways to cross the chasm. But, what happens when you realise the chasm is a deal-breaker? What if you find that it is not the direction after all? Then, you have to build that new path. This is called a pivot, and in startups, you would be pivoting several times as you go out there and test your value proposition. A pivot is a good thing because it shows that you are listening to the market, to your customer, and then changing tack to meet their needs. But be careful too. Pivoting too early, when the market is nascent, when they don't know what they don't know, might cause you to lose out when you shouldn't. It will take all your business insight to determine when, and by how much, you should pivot.
Cut the strings when the time comes
But what happens when your pivots become a pirouette? What happens when you have failed to meet your milestone targets and you are fast running out of resources? And what happens when you have pitched 50 investors and they all turn you down? It may well be time to call the spade a spade and cut your losses. You have tried your best, and any amount of positivity will not be able to resuscitate the dead horse. And when you cut, cut. Don't look back and lament, "I should have done this, or I should have done that!" Especially if someone else comes to the market after you with a similar idea and succeeds, when you didn't. Just be thankful that you had the opportunity to learn first hand what it takes to bring an idea to market, identifying what you could have done differently. Then perhaps, with this hindsight, you can start something else anew, this time making sure you don't repeat your mistakes.
So, can there be too much positivity? No, not if you can structure your entrepreneurial startup along the lines of the 6Cs. That, in a sense, is constructive positivity, not unbridled ones. No one wants to work with a grouch, for sure, but one also cannot survive in the startup scene on love and fresh air. We need to channel the positivity constructively to build the business. It is hoped these 6Cs can help you do just that.
Drop me a line...
And if you need some help along the way, why not drop me a line? I am happy to help startup entrepreneurs with their pivots and their decisions to cut. Just click on my picture below and fire away, no question too small, too embarrassing, too difficult...
Founder, Growth Consulting Asia
About Ian Dyason:
Ian is a serial entrepreneur whose passion is in creating new value propositions for current and new markets. He has been a coach & consultant to large and small businesses for more than 10 years, and specialises in strategic thinking.