I rarely have time to watch a lot of T.V. But over the past 10 years, I try to make time each week when I can to watch two shows with my younger son. Gold Rush and Shark Tank.
We love both of those shows for various reasons because they are not only entertaining but can be educational.
One of the main investors on Shark Tank is Kevin O’Leary who is known as “Mr. Wonderful”. Most people do not like him and you can tell most business people who present their ideas would prefer to not team up with him. He can be very terse in his dialogue and can rip apart a business in just a few seconds.
The more I have watched the show though, you get a sense that he really knows what he is talking about. While the other investors can be swayed by a little emotion and make some decisions based on empathy at times, O'Leary does not.
One of the things he rips people apart for is holding on to bad ideas. They bring ideas in and he basically tells them to quit and go get a job. I don’t necessarily admire that but I do respect it and its importance to making good decisions on when to pull the plug.
One of the main reasons I see online ventures fail including some my own projects is hanging on to bad ideas too long.
There is just too much invested in time and money and the person is going to go broke or succeed as if it was a badge of honor.
In the e-commerce world, that is a person who has tried 20 different advertising schemes, redefined their target customer a few times, repackaged their product or content several times, split tested every variable more than once and they still believe they are one nugget away from hitting pay dirt (Had to throw in a Gold Rush reference).
The businesses that succeed have a faster way of testing out their ideas and variables and have the discipline to shut it down quickly based on an predetermined exit strategy.
Their exit strategy is outlined with key performance indicators before they ever get started. They know their Out before they ever get fully IN. And they trust their initial planning and decision enough to remove the emotion from the disconnect cord. Understand that there is certainly emotion involved when there are employees, support resources, partners, etc. that support that business as well.
But when it is not working, they pull the plug.
Many businesses fail because the owner did not pull the plug soon enough and highly likely they did not even have an exit strategy defined before they ever started.
On the flip side, you have the “boiling ocean” owner.
They do the opposite and try to do much…or as they say, “boil the ocean”.
They will fail because they have way too many ideas to ever be good at one of them. They are the “jack of all trades, master of none” type of business owner. They never become great or special at one product or service, so they try to flood their business and market with way too many products and services and ventures.
If you’re an investor, watch out for these kinds of business owners. They are the worst kind because they will unintentially smokescreen this flaw with busy work. They demonstrate a “lot of energy” and “lot going on” all the time but it is never focused on advancing 1-2 key concepts in their business for very long.
They will burn through cash like it is pure gasoline.
Get great at 1-2 things in your business and put 100% of your resources and energy into it. If you have a product or service offering, avoid expanding too early. You will see opportunities to expand and be creative which is great, but that could be the siren song that is luring you to your online doom.
In your business planning for your site or product launch, have specific concrete goals in mind that include your definition of success. These should always include a timeline with an exit strategy if goals are not met.
Realize that it is generally not the extremes that we see that cause people to fail or go broke.
Most businesses eventually fail with marginal results, not dramatic events.
When you’re not selling anything, that is an easier decision to walk away. It’s when you are continually having marginal results for long periods of time, after having tried several variables that a business owner looks up and realizes they are out of cash and can’t continue.
Recognize the warning signs that it may be time to shut it down and move in a completely different direction, instead of putting more lipstick on a pig.