1.6: Chapter 5 Knowing When To Quit

When to Quit

TOOFR IS NOW MY DAY job. It’s my regular, low-risk salary and I’m continuing to build other businesses on the side.

My side businesses include a customer email tracker, an employee satisfaction surveyor, and a customer job change tracker. After several months of these web applications being live, however, only one of them has customers.

I will give these businesses a few more months of marketing support and then I will shut down the ones that aren’t working. If a business is going to work, you should know within the first six months. You should be able to get people to use it regularly, which then gets people talking, which then generates inbound leads.

Here are three conditions for when you should quit your side business and start a different one.

When it drains rather than energizes you

If it’s hard to muster the energy to work on it then you should probably stop, take a breather, and consider starting again on something else.

If your side business doesn’t make you excited then you will have to be extremely lucky for it to work. Side projects that don’t have your full creativity and enthusiasm are doomed to fail. It’s as simple as that.

You, your family, and your friends are all better off if you spend that time watching TV, reading a book, or doing something else that makes you happy. Chances are far greater you’ll find the right business to work on when you’re happy than when you’re stressed.

That’s a universal truth in entrepreneurship.

When the market responds poorly

Most businesses fail. You’ll hear this again and again, from MBAs, entrepreneurs, and the institutions who finance them, because it’s true. Starting a business is hard and it usually doesn’t work out.

This is all the more reason to start multiple businesses. The more you create, the better your odds are of finding success.

It’s not just my advice. Jonathan Siegel says so too. Here’s what he told me about parallel entrepreneurship and failure:

“Persistence helps you meet objectives, but I don’t believe you can just persist through making a great company. Failure can take a long time. Success can happen very quickly. I always want to fail fast. Running more than one thing simultaneously reduces your amount of persistence on any one thing but gives you more tickets to find success.”

It’s worth noting that Jonathan runs a private equity fund with dozens of employees who operate a half dozen businesses. He is a pilot, owner of a chain of Irish pub restaurants, and a husband and father of eight. He has offices in Las Vegas, San Francisco, and Tokyo. We can’t all be like Jonathan Siegel, but we can follow his advice about when to quit.

Let’s say you’re completely jazzed about this project. You tell everyone you know about it. You’ve built landing pages using Instapage or Unbounce and ran Google Ads to drive traffic to them and see how people respond.

And then…crickets. No one’s clicking, signing up, or pressuring you to launch. Or maybe you were able to build the service yourself and even then, with a fully functioning application, the market says no.

It hurts. You don’t want to give up, but even after iterating on taglines, pricing, and finding some clever ways to reach your target audience online, there are still no takers. When that happens you know at least one of these things is true:

• Your product is not differentiated enough; there are too many other players making too much noise for you to be heard.
• Your product isn’t needed. Maybe it’s a vitamin and not medicine, or maybe it’s just a plain bad idea.
• You’re wrong about who the customer is. Maybe your target customer isn’t willing to pay, is hard to find online, or there actually aren’t very many of them.

All of these cases are deadly. It’s best to figure it out soon and take action. Six months is a good timeframe, given that you’re only thinking about this right now on nights and weekends.

When the cost is too high

There are two kinds of costs to consider.

The first is tangible. It’s the hard money cost of paying for servers, marketing, development, and sometimes data. Most of the time all of this is pretty cheap. You can get a year’s worth of all of it for less than you might spend on an overseas vacation.

The other cost is much harder to pin down. It’s the opportunity cost of not doing something else. Let me explain.

When you’re in the throes of launching and running your side business, you don’t have time for much else. You can’t also be an overachiever at work, the first in and last to leave, even impressing your boss by showing up on the weekends. You need to spend those hours on your side business.

Because you will not be able to give it your all, you may lose out on rewards from your day job. Having a side business will keep you off the path to promotions because your nights and weekends will be spent on your side job instead of on projects at your current job. Be honest if your goal is to be promoted in your current position.

I still believe you should scrape together what little time you have left to become a parallel entrepreneur, even if it’s just keeping a journal with notes and ideas. Accumulate those thoughts while you shoot for those promotions and bonuses.

If you prepare, you’ll build your side business faster when the timing is better.

I think back on the time at Scripted when I was on-site during the day and building Toofr at home at night. I knew that I could have spent that time putting more effort into Scripted. But I also was aware that it wouldn’t have mattered. I wasn’t going to not get married, not have children, not have any sort of other life so I could work more.

I knew back then that it was about working smarter, not working longer hours. It was running a marathon, not a sprint. Toofr gave me energy and fresh ideas and actually made me more excited about going to work at Scripted.