Cutting Your Losses - Knowing When To Let It Go
Cutting our losses, it is probably one of the more difficult things we have to do in life. In the eBusiness world this is probably an ever more occurring activity as ventures constantly rise and fall. And for those of you like me who run networks of websites and are involved in many different markets this occurs at even greater intervals.
Knowing when to cut your losses is an instrumental life skill. Just like a game of poker, it is key to know when you have a good hand, and when you have a bad hand. In reality it is all about acting decisively do not procrastinate it out, take action when it is appropriate and learn to rebound from failure.
With new start ups for example, I think it is a great idea as part of your initial business planning process to set a reasonable debt-figure to which, if you hit it, you know it is time to call it quits. This can help attribute to the prevention of going down into a continual black hole of failure. Likewise, you need to figure out how long you are willing to commit to an operation that will barely support itself as most businesses do not succeed in the first three years.
Sometimes, things just do not go the way they are supposed to go, were planned to go, or expected to go. Periodically, a task, a entity, or even a person will drag you so deep that you have to cut it off to avoid total failure. There are times though when you may be cutting your losses too soon. Though again, it is timing, look at GoDaddy.com for example, a huge company now, but according to Bob Parson (founder), when he initially started the business, there was a point in its growth that he had put over $10 million into the company, it still was not profitable, and he almost allowed a friend to buy in at pennies on the dollar to prevent himself from going bust. The friend ended up backing out, and today the company is extremely profitable, doing great, and maintains a huge presence on the Internet, and probably one of the largest market shares in domain registrations.
Unfortunately in life nothing is totally predictable, and generating “what ifs” is always substantially easier than creating resolutions for them. So once you are ready to let something go, you need to make sure you have satisfied other viable options (or at least the top X of those). And remember, with eVentures though, it never hurts to give yourself an out (or an “inâ€? in this case), so that say in 6 months you can go back, pick up where you left off and try things all over again with a new, regained focus.
You just read my mind. The last few days I’ve been thinking a lot about cutting my losses on certain projects. It’s really important to know when enough is enough and to shift your time into different projects.