When to pull the plug?

By Elie Nammar

Many entrepreneurs launch companies and don’t realize that in some cases it would be better to shut the business down instead of pivoting one more time. They keep iterating and changing and modifying the concept because success is right on the corner. There is however some cues that should help the entrepreneur know if the venture has reached its end or could be pivoted one more time.

First and foremost: passion. “An entrepreneur should be passionate enough to defy gravity”. If the founder’s passion for the company or the idea he/she’s launching starts to fade when the question of pivot or not comes up then it will be much harder to rally people to work with this company and even harder to sell the idea to investors and customers. When you start feeling that you’d rather be somewhere else doing something different then you probably should. Nonetheless, your idea might be fantastic but for other reasons (personal, implementation, etc.) you are not enjoying it; then you probably ought to shut the business down or sell it.

Second is implementation and competition. Has someone beaten to the market? If you’re plan was to launch an innovative product that resolves a key pain point and competition reached there before you were able to launch then you should probably consider one of  three:

-          Add features to product that differentiate it from competition
-          Pivot
-          Move on to another venture

The likelihood of doing the first one is high at the beginning but with time the entrepreneur is more likely to go for the third option. The reason is simply implementation. If the others already beat you to the market and can replicate any feature you add (because it’s nice to have only, they might not even need to replicate) then it will be hard to compete against them. (This probably doesn’t apply in pharma…)

The third and final point is when you’ve pivoted so much that you cannot clearly identify what the purpose of the company/product is. When you’re trying to explain to someone what are you doing and why and it’s taking more and more time every time then it might be an idea issue. You’ve pivoted so much that it is unclear what it is you’re trying to do. I believe this is an inherent risk to pivoting because an apple doesn’t fall far from the tree. You might want to leverage your current assets (physical or knowledge) and your mind is biased because you have been so focused on your initial idea. So you might try to force things into your pivot, or even worse might think you pivoted but it was just window dressing.

So how do you know when to pull the plug? Well the above helps but since it’s not tangible and because you as an entrepreneur are biased then it’s difficult to know. One idea would be to have a set of “fresh eyes” look at your company and challenge the idea and assumptions behind it and help you see it from a different angle.



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