Chapter 17 – What to Do When There is Nothing Else to Do

A part of me is loath to write this chapter, but I have simply worked with too many people who have needed this type of advice to leave it out.  I myself have needed this type of advice in the past, and I definitely was not served by the fact that no one wants to talk about it.  Yes, in our society, quitting is a dirty word, something to be ashamed of and avoid at all costs.  We pride ourselves on being the can-do type, and quitting seems antithetical to everything we stand for.  Sometimes, though, quitting is not only the best thing to do, it is the most honorable thing to do.  Quitting takes courage, and is never an easy decision.  And, for those who do quit honorably and responsibly, you have my deepest respect.

It goes without saying that I am not talking about quitting as soon as things get hard.  Business is supposed to be hard and running a business is an endurance event.  In fact, success often goes to the ones who can stick it out long enough to claim it.  Lots and lots of people quit too early, but that is not what I am talking about here.  What I am writing about here is what to do when you have exhausted all of your options, when your business has gone from a ship with a few leaks to one that is definitely going down.

Often, this threshold is really, really hard to spot.  Your steely determination and never-say-die attitude is what has gotten you to this point.  You removed quit from your vocabulary, so the thought never crosses your mind.  You have put in year after year of back-breaking effort and there is no way that you are going to let all of that effort go to waste.   You are Mr. (or Ms.) Stick-to-Your-Guns and you simply aren’t going to take no for an answer.  And again, often this attitude can be the difference between success and failure.  But then again, sometimes the unthinkable is precisely what you should do.

The main thing I look for when it comes to quitting is pain, especially the pain inflicted on those around you.  Of course pain inflicted directly upon you is important, but you volunteered for this experience.  All those around you were drafted.  And it is often those around you who feel the pain most acutely.  They don’t have the ego boost of being a business owner.  They are just the bystanders, yet they can be just as intimately involved in the effects as you are.

The other thing that I look for are long, unshakeable trends.  That is, downward trends in your business that you have had zero success in stopping or even slowing.  These are usually market forces caused by some external factor.  Perhaps these are telling you that your business needs to evolve in order to stay current and stay in the game.  But if you have already changed as much as your business can, then this is something you truly cannot do anything about.  This is an unstoppable force, constantly exerting its influence on what you do.

If you identify these sorts of forces, it is important to be truly honest about your own limitations.  This is contrarian to the super-human abilities that most entrepreneurs possess.  The truth is that there are simply some problems that are too big for you to solve.  They are definitely in the minority, but these problems do exist.

If your business is in a long, drawn-out, downward trend, the likelihood of one of these situations arising goes up every day.  Every bit further down the hole you go, the more vulnerable your business is.  That is, when you have been riding a downward trend for a while, you have used up your businesses resources along the way.  Every challenge you face takes resources to overcome.  And, if your business is shrinking, you may not be able to resupply these resources.  It may be all you can do to just keep the lights on.  And since there is no excess to replenish your business, every challenge takes a permanent toll.  Take enough of these tolls, and your business will simply not be able to survive.

Let’s look at an example.  Let’s say your business is shrinking by 10% per year.  This sort of shrinking is usually not enough to immediately kill a business, but it is the same as business cancer.  Whether you know it or not, your business is dying a little bit every day.  And, it is up to you to reverse the trend.

Now, if you are in this situation, the first thing you need to do is stop the business from shrinking.  Let’s say that your business was doing $500,000 in sales last year, and is doing $450,000 in sales this year.  In order to get back to $500,000 next year, you need to grow by over 11%.  This is compound interest working against you, and that is a 21% swing in business (10% loss to 11% gain).  You need to not only stop the shrinking (you would need to do more business than you are doing now just to stay even, since you are shrinking), but you need to grow.  That large of a swing is extremely hard, especially with the dwindled resources you probably have left.  Fighting a shrinking business is a battle of attrition, and in order to pull the business out, you will probably have to do more with fewer resources than ever before.

Now assuming that the business shrinking is not from gross neglect, or just chronic bad decision making, you have another problem.  That is, the shrinking of your business has a cause.  That cause may be something you are doing, but it may very well be something outside of your control.  Perhaps a large competitor has entered your market and you are no longer competitive.  Perhaps your market is shrinking, either due to changing taste or your products’ obscellesence.  Whatever the reason, market forces are really, really hard to fight.  Often when you win one battle, things just get harder the next month.  This is especially true if your market is shrinking.  Competitors fighting over a shrinking market typically create a bloodbath, often with no clear winner.  The fight takes its toll on everyone involved, with the least competitive companies being taken down first.

By being honest about market forces, especially those you cannot control, you can have the ability to make decisions based on reality, rather than fantasy.  By being honest about how things really are, you keep yourself from becoming delusional, believing that you can overcome unstoppable forces if you just work a little harder.  You keep yourself vigilant to trends and the truth about where your business is going, rather than laboring under the fantasy that even though things have been down for the past 33 months, you just know next month everything will get back on track and you will be ok.  The truth is, market trends rarely reverse themselves, at least in the same decade.  And, if you are set to ride out a trend until it changes, chances are that you will be long-broke before the change ever comes.

The other thing you need to be honest about is the amount of pain being cast upon those around you.  A failing business can heap untold problems and struggle onto even the healthiest of relationships.  If this goes along long enough, resentment and bitterness start to build.  Let these grow long enough and the relationships can be destroyed.

Be honest about the effect the business is taking on you and those around you.  Even if the effects are indirect, such as you are exhausted so your kids do not get to see anything other than the grumpy/angry version of you very much, be honest about what your business is really creating in your life.  Really look at the toll it is taking on you and those around you.  And then, honestly ask yourself if it is worth it.

To me, no business is ever worth prolonged pain and suffering.  Life is too short to live it in misery, especially if the misery is self-created.  Being in business for yourself is optional, a fact many business owners forget.

If you do find yourself in a no-win situation, if you are truly trapped by your business and you do not see any way to stop the pain that is being thrust upon you and those around you, know there is always a way out.  Anything that has been built can be un-built.  You can set the yoke down and refuse to carry it any further.  The business does not need to take you down with it and there are always options to get yourself out.

I had a direct example of this with one of my counseling clients.  This particular client owned an automotive business.  He had been in business for about nine years, and early on things had been good.  He was in a smaller town, and without a lot of competition, he was able to steadily build his business.  About five years ago, though, the national chains started to move in.

Almost overnight, his business started to drop.  He knew that he offered great service, but he just could not compete on the name and price of the national stores.  He tried every marketing trick he could think of, something he was a bit rusty on since his business had been referral only since the first year.  He took out ads in the phonebook, on the radio, on TV, and in the newspaper.  Nothing seemed to work.  It seemed that his business was caught in the tractor beam of the Death Star, and there was no escape.

He re-dedicated himself to his business.  Even though he had to price-match with the chain stores, he decided he could still out-do them in quality and personal service.  I do believe that he worked harder than anyone else in town to please his customers.  Yet, the trend continued.  His sales kept shrinking and shrinking.  He moved to a smaller location, cut his staff down to just himself, and removed every non-mandatory expense from his business.  He got his business as lean as it could possibly be, yet it still shrank.

Unfortunately, this is the point where I met up with him.  I toured his operation (which had the atmosphere of a dungeon) and listened while he explained to me that he worked seven days a week and he was the only employee.  I then asked to look at his financials, and things were incredibly bleak.  I asked him how he even afforded to pay himself, and he said that he didn’t.  He had a side carpet cleaning business he did Friday, Saturday, and Sunday nights just to earn a little bit of income.  I asked him how much he slept, and he said he averaged about two hours on the weekends and about five hours during the week.  I asked if he had a family and he told me that he had been married for four years and had a three year old at home (with another on the way).  At that point he remembered about the rent.  It turns out that he had not paid his business rent in three months and was probably about three weeks from getting evicted.

I was speechless.  One of the few times in my life I was working with a client and I had zero ideas.  I was just amazed that this guy was even able to do what he was doing.  I was doubly-amazed to think this was something this guy chose to do every day.

He asked me what I thought he should do and almost like a reflex I blurted out bankruptcy.  I have never given this advice to a client, yet this is what I thought this guy needed to do immediately.  Normally when a client is thinking about bankruptcy, I can find about 10 options they can take instead of filing.  For this poor man, though, the compassionate thing to do for everyone involved was the quit as soon as possible.  This business was only creating damage and thus it had to be stopped.

In later meetings, we talked about the realities of his situation.  It turned out that through his business he had some marketable skills.  He was a smart, extremely hard-working person and I knew at that point any business would be lucky to have him.  I cannot imagine a more loyal employee than one who has gone through all that and now has a steady paycheck (and only has to do his job, and only for 40 hours a week).

From personal experience let me tell you that there are far worse things in the world than having to get a job after closing a business.  Granted it is not fun, and your ego will take a huge beating, but you can do it.  And when compared with the financial and relationship ruin that can come from having a failing business take you with it, it is a small price to pay.

Now, that is not to say that re-entering the job market after a prolonged absence as an employee is easy.  It takes a major attitude adjustment, and a lot of gratitude.  I know when I finally found full-time employment after closing a business, a powerful sense of relief washed over me.  And besides, it can be incredibly healing to be able to work at a job while you lick your wounds.  It is really, really, nice to not have to worry about payroll.  From having come from running a shrinking business, you can be awestruck at just how easy it is to only have to do your job well.  You are so used to being responsible for dozens of things that to now only have to really be responsible for one thing can be extremely pleasant.

And besides, just because you had one business crater does not mean you cannot start another one.  Assuming you learned something from your experience (I would think it is about impossible not to), you will not make the same mistakes.  You are not the same person.  You are much wiser, and you will not consciously put yourself through the same hell you just went through.  You have a huge leg-up to all of those first-time business owners out there.  You know what not to do.  You have experience, a resource no amount of money can replace.

If your business is failing, don’t let it take you out.  Learn to spot when it is time to quit.  Until then, give your business everything you have.  But when the day comes where you know it is time, know you can do so honorably.  Fold your cards, do what you have to do to reset yourself, and then deal yourself in again.  Business is a great game if you know how to win, know how to lose, and know how to fold.