MBA2369 Q&A Wednesday: How long should I keep going before I quit? - The $100 MBA Show

Summary

The $100 MBA Show - Episode: MBA2369 Q&A Wednesday: How Long Should I Keep Going Before I Quit?

Release Date: September 27, 2023

Host: Omar Zenhom
Podcast Description: Awarded Best of Apple Podcasts, The $100 MBA Show delivers practical business lessons for the real world. Host Omar Zenhom shares lessons, strategies, and insights from over 20 years of entrepreneurship, providing actionable advice on everything from validating your idea to marketing, sales, and reinvestment—all tailored for individuals with minimal resources.

Introduction to the Question

In this episode of Q&A Wednesday, Omar Zenhom addresses a pressing concern from one of his listeners, Everly. Everly asks:

“How long should I keep going before I quit? I’ve been doing it for about eight months. I’m losing much of my savings in the process and I’m not sure if entrepreneurship is right for me. How long do I need to stick it out before it’s time to quit?”
— Everly [01:26]

Omar identifies two distinct aspects to Everly’s question:

Should she quit her current business if it’s not yet profitable?
Should she abandon the idea of entrepreneurship altogether?

Part 1: Deciding to Quit the Current Business

Omar emphasizes the importance of persistence in entrepreneurship:

“The answer to this question, how long should I wait until I quit? The answer’s simple. Until… until you are successful, until you’ve made it and are able to sustain yourself, it becomes your livelihood.”
— Omar Zenhom [05:00]

He advises that quitting the business prematurely can lead to long-term dissatisfaction. Instead, entrepreneurs should evaluate whether the current trajectory is moving towards profitability. Key strategies include:

Tracking Financial Metrics: Monitor revenue, profit margins, customer acquisition, and lead generation to assess business health.

“You need to be tracking, of course, your financials, how much revenue you’re making, how much profit you’re making, the number of customers you’re having, how many leads are coming in.”
— Omar Zenhom [07:15]
Analyzing Trends: If losses are decreasing over time, it indicates potential movement towards profitability.

“If the trend is moving in the right direction, it means you’re making the right investment. That means eventually your business will be able to be profitable.”
— Omar Zenhom [09:30]

Omar illustrates with the example of major public companies like Uber and Slack, which operate without profit for extended periods due to strategic investments and growth plans. He underscores that while he prefers quicker profitability, he acknowledges that some business models require longer periods to turn a profit.

Part 2: Evaluating the Entrepreneurial Path

Moving beyond the current business, Omar discusses whether Everly should continue pursuing entrepreneurship as a career:

“Entrepreneurship is like any career. If you really want it, the answer to this question, how long should I wait until I quit? ... Until you are successful.”
— Omar Zenhom [03:15]

He encourages self-reflection to determine if entrepreneurship aligns with one's passion and resilience:

Desire vs. Discomfort: Assess whether the desire to be an entrepreneur outweighs the challenges and discomfort it brings.

“You just got to want it more than you hate the downsides.”
— Omar Zenhom [03:45]
Lifestyle Considerations: Recognize that entrepreneurship is a lifestyle that requires continuous effort without the natural breaks that traditional jobs offer.

“If you’re an entrepreneur, it’s a lifestyle. You’re thinking about your business 24/7.”
— Omar Zenhom [06:00]

Financial Considerations and Sustainability

Omar stresses the importance of understanding and managing the financial aspects of a business:

“If you can’t afford that much runway, that much loss over two years, then you might have to pivot the business.”
— Omar Zenhom [10:00]

He advises entrepreneurs to:

Assess Financial Runway: Determine how long the business can sustain losses before personal finances are jeopardized.
Consult Financial Experts: Work with accountants or financial advisors to project profitability and make informed decisions.

“Speak to your accountant. Speak to a financial expert about this.”
— Omar Zenhom [09:45]

The Power of Pivoting

Before considering shutting down a business, Omar recommends exploring pivoting as a viable option:

“There's nothing wrong with pivoting your business. ... It’s one of the first things you should do before you even consider closing the business down.”
— Omar Zenhom [12:25]

Drawing from Jenny Blake's book Pivot, he outlines how pivoting can help realign the business model to achieve profitability by:

Altering Offerings: Introducing high-end services or products to increase revenue.
Adjusting Strategies: Shifting focus based on market feedback and financial trends.

Omar shares his personal experiences with failed businesses, emphasizing the value of learning from these setbacks to improve future ventures:

“I’ve had businesses that crashed and burned, that ran out of money that I had to close down. And that’s okay. I kept going.”
— Omar Zenhom [13:50]

Final Insights and Encouragement

Concluding the episode, Omar reinforces the significance of perseverance in entrepreneurship:

“If you want something bad enough, you’ll figure out a way to make it happen.”
— Omar Zenhom [15:00]

He acknowledges the inherent challenges of entrepreneurship but highlights the potential rewards for those who persist:

“The most successful entrepreneurs grinded for 10, 15, 20 years, faced adversity, faced risks, challenges... and now they have a fantastic, rewarding, fulfilling life.”
— Omar Zenhom [15:30]

Omar encourages listeners to practice self-awareness to determine if the entrepreneurial path aligns with their personal goals and resilience.

Conclusion

In this candid and insightful episode, Omar Zenhom provides a comprehensive framework for evaluating whether to continue with a struggling business or reconsider the entrepreneurial journey altogether. Key takeaways include:

Persistence is Crucial: Continue pursuing entrepreneurship until achieving sustainability and profitability.
Data-Driven Decisions: Regularly monitor financial and operational metrics to guide decision-making.
Flexibility Through Pivoting: Be open to altering the business model to enhance profitability before deciding to quit.
Self-Reflection: Ensure that the entrepreneurial lifestyle aligns with personal aspirations and resilience levels.

Omar's balanced approach combines practical financial advice with motivational insights, making this episode an invaluable resource for aspiring and current entrepreneurs facing similar dilemmas.

Notable Quotes with Timestamps:

“You just got to want it more than you hate the downsides.”
— Omar Zenhom [03:45]
“If the trend is moving in the right direction, it means you’re making the right investment.”
— Omar Zenhom [09:30]
“There’s nothing wrong with pivoting your business. ... It’s one of the first things you should do before you even consider closing the business down.”
— Omar Zenhom [12:25]
“If you want something bad enough, you’ll figure out a way to make it happen.”
— Omar Zenhom [15:00]
“The most successful entrepreneurs grinded for 10, 15, 20 years, faced adversity, faced risks, challenges... and now they have a fantastic, rewarding, fulfilling life.”
— Omar Zenhom [15:30]

Connect with Omar Zenhom:
For more actionable business lessons and to submit your questions, visit https://100mba.net or email Omar at omar@100mba.net.

Transcript

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Omar Zenhom (1:26)

Hey O. Welcome to the $100 NB Powerful Business Lessons to help you along the journey. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started back in 2014 and today's episode is Q and A Wednesday. On Q and A Wednesdays, we answer a question from one of you, one of our listeners. If you got a question you want to ask, go ahead and email me over at omar@100mba.net Today's question is from Everly and Everly asks how long should I keep going before I quit? I'm having a tough time with my business. I've been doing it for about eight months. I'm losing much of my savings in the process and I'm not sure if entrepreneurship is right for me. How long do I need to stick it out before it's time to quit? Such an important question that Everly asks and we're going to answer it in today's episode. There's actually two parts to this question. The first part is should you quit the actual business if it's not working out for you, if it's not making you money? When should you quit? When should you decide to let it go? And then there's the question of should you quit the pursuit of becoming an entrepreneur? These are two different things. Entrepreneurship is a career just like any other career. And quitting the career is a whole different thing. Let's get into it. Let's get down to business. Like I mentioned, there's two parts to this. Should Everly quit her business, the actual business she's running, after a certain period of time? And the other question is, should she quit the whole idea of becoming an entrepreneur or being an entrepreneur? And like I said, entrepreneurship is like any career. If you're a graphic designer and you work for a company, you might switch companies and might get a better offer somewhere else. You might find a better opportunity at a different organization, but you're still a graphic designer. So we need to address this question. First, quitting entrepreneurship altogether. And then we'll get into quitting a particular business or project. And this is going to be really one of those candid and honest episodes where you might get a little bit of tough love from me. And here's the bottom line. You need to ask yourself, do you want to be an entrepreneur? Is this the life you want or do you like the idea of being an entrepreneur? The idea of being a business owner, you see, you got to be okay with, of course, all the good things that come with it, the freedom, the flexibility, the autonomy, the ability to become financially independ, all these great things of being an entrepreneur. But you also got to be okay with the challenges of being an entrepreneur. The lack of visibility, the lack of consistency, the risks involved. You got to be comfortable with the negatives as well. And the bottom line is, is that you just got to want it more than you hate the downsides. So you basically got to want it more than how much you dislike the discomfort of it. And if you do want it, if you do want to be an entrepreneur, if this is like your dream job, this is your dream career, if this is what you want to do for the rest of your life and you can't imagine doing anything else unless of course, you had to. But the point here is, is that if you really want it, the answer to this question, how long should I wait until I quit? The answer's simple. Until, and I love this word, until. What do I mean by this? Well, you're going to keep trying to become an entrepreneur or be a successful entrepreneur until you're successful, until have made it and are able to sustain yourself, it becomes your livelihood. Until. Until. Until. Basically it means don't quit, right? You just don't quit if you want it, because otherwise quitting is going to make you unhappy. It's a short term solution. That's not going to make you happy in the long run. And trust me, I know how it feels when you're on that rocky road of entrepreneurship. It's not fun, it's lonely, it's super, super challenging. On your mind, on your mentality, on your spiritual well being, even on, of course, your physical well being. It takes a toll. The thing about business and being an entrepreneur is that you can't just turn it on and off. Like if you're in a job you don't like, at least you have some respite after 5 o'clock when you check out, you have some respite on the weekend, you have some respite when you go on holiday on vacation. But if you're an entrepreneur, it's a lifestyle. You're thinking about your business 24 7. And that shouldn't be a bad thing if you love what you do. So if you've established, hey, I want to be an entrepreneur, this is what I want to do and I'm going to do it until I am successful, then let's talk about the particular business that you're working on. Everly mentioned she's been working on her business for eight months. She's losing a lot of her life savings. Not fun, right? Super stressful, but it's not abnormal. This is actually par for the course. Many entrepreneurs, many business owners, when they get started, they're losing money and it's seen as an investment. You have to invest in your business. Now, in the beginning of your business, especially the first few months, the first year or two even, it's very important you're paying attention to your data, to your statistics, to the trends that are happening in your business. You need to be tracking what's happening everywhere. What do I mean by this? You need to be tracking, of course, your financials, how much revenue you're making, how much profit you're making, the number of customers you're having, how many leads are coming in. Whatever business it is, you need to track these numbers. Why? Because you need to see the trend of your business. Where are things going? For example, let's say I'm in month eight of my business and I'm losing money, right? I'm losing, let's say, $1,000 a month. I'm taking money from my pocket and putting it into the business just to keep it afloat. But the next month I'm still losing money, right? I'm still not profitable, but I only had to put 800 in, and the month after that, 700. And then a month after that 650. The trend is telling me things are moving in the right direction. I'm still losing money, but not as much as last month, which means I'm moving closer and closer to profitability. I'm getting closer to my goal. This is worth fighting for, especially if it's a business that you enjoy, you love, and the product and the service is something that you feel proud of. Listen, most people quit businesses because they quit too early. You got to figure a way to, to make this work for you. And this is why I always say try to keep your expenses low at the start so that you aren't taking money out of your savings and popping into your business to keep it afloat. But sometimes that happens. I had to do this for years. But if the trend is moving in the right direction, it means you're making the right investment. That means eventually your business will be able to be profitable. And then what we want to do at that point is make it more and more profitable, right? Increase the margins. Let me give you a list of companies and I want you to guess what they all have in common. Uber, Lyft, Pinterest, Snap, Zillow, Slack. What do these six companies have in common? Well, I'll tell you, they're all public companies that are still not profitable. These are these big, huge business and brands that we know about, and they don't make a profit. Now, this is a whole different story about why these businesses exist and how do they get all this investment if they're not profitable and all that kind of stuff. But the point here is that there's a lot of businesses that just take a long time, depending on the business model, to be profitable. I don't like those types of businesses. I like to be as profitable as possible as soon as possible. But I know the reality that sometimes any business is going to take some time to get to that point, a year, maybe even two years. Now, if you can't afford that much Runway, that much loss over two years, then you might have to pivot the business. You might have to change the business, you might have to alter the business, or you might have to quit it because you just simply can't go bankrupt from a personal standpoint, in terms of your own personal finances. But if the trend, it looks like you'll be okay. That if you could project out that your business will be profitable and you'll be able to pay yourself back all those loans you gave the business. Because remember, your business is its own entity. And of course, speak to your accountant. Speak to a financial expert about this. But when you do put money into your business, it's seen as sort of like an investment. You're an investor in your own business, then it's actually worth it. If you can stick it out and make it happen, fantastic. But if you have done the projections, have done the numbers and say, oh, I'm going to run out of money, I'm not going to be able to do this for much longer and the trend shows that a miracle is going to happen in order for me to do this. The numbers don't lie. Then changing the business, pivoting the business, changing the product offering. This might be something you have to do. This episode is brought to you by the Jordan Harbinger Show. Are you looking for a new podcast? 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