When is it Time for an Entrepreneur to Fold

Apart from starting a new business there are two other things I really love to do; that is to play Chess and Poker. I suppose it is because I equate both of these games with being in business.

When growing up my father used to say, “Son, chess is life. If you can win at chess you can win in business.” Well today there is not a day I do not think about either one of these two games when making any major business decision. I approach both of these games with very similar business tactics such as coming in with a pre-game strategy. I know coming in without a pre-game strategy I would lack sufficient confidence to beat all of my opponent’s.

This is not to say that every time I play with a pre-game strategy I’m guaranteed win. There are many times I am ready to play with all the confidence in the world but I was just outplayed by a better opponent or they landed a lucky Fourth Street / River Card.

It is at this point in the game when a major decision must be made. Should I continue on knowing that I will inevitably lose or fold early on, accept my loss and play another round?

I believe one of the hardest business decisions an entrepreneur must make is deciding when it is time to call a spade a spade. To me there is nothing harder then making the decision to leave a project which I have spent years building.

There are many times decisions like this that are made for you. There are cash flow issues, the market is not ready for your product or service or you have just taken on a project which is beyond your ability.

What I am talking about here is making a decision to leave a project because you know in your heart that the time has just come.

Whatever the reasons are I think any sensible entrepreneur must set a personal limit on how much time you commit to any project.

The sad thing is this concept goes against what we have all learned in school and by watching movies; they want us to believe a good captain, a real leader should always goes down with his ship.

But in today’s day and age, being an entrepreneur is extremely difficult. Competition is fierce and the name of the game is survival. Does nobility guarantee success? Or does setting personal limits, folding your hands when it is time and use the newly gained knowledge for a new project?

If you have been here then you know what I am talking about. There are entrepreneurs who would say the only way to be a true success is to push on, carry on, fight a good fight and fight till the end. But does that mean be silly, neglect personal responsibilities and live in a fantasy world?

I was watching American Inventor the other night and there were a few applicants who had “sacrificed everything” in order to be the next American Inventor. They wanted to achieve the American dream so bad that the only way in doing so was by quitting their jobs, getting into unrecoverable debt, subsequently destroying their families.

Why are we being told this is the way it should be done?

I hear that nearly 90% of all new restaurants fail in the first 6 months of business. That nearly all small businesses fail in the first 2 years and chances of them making it to the 5^th year is slim to none.

It is not the smart play to go down with a sinking ship. The strategic chess player takes everything they’ve learned from past games and applies it to his new pre-game strategy. The tactical poker player folds his hand early enough in a round so he has the opportunity to win later on with better cards.

This entry was posted on Tuesday, May 9th, 2006 at 3:37 pm and is filed under Shandy Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.