09 Jul Financial Advice For Entrepreneurs: Know When to Quit
Tackling steep odds and believing in your business, even if others call you crazy, can just be part of the wild ride of entrepreneurship. However, there is a big difference between taking smart, strategic risks to launch a business, and taking on so much risk that you put yourself in financial peril.
Are you an entrepreneur, or a wantrepreneur? Do you know when it’s time to quit what isn’t working so you can re-direct to something better?
- Know that letting go can be tough. An entrepreneur pours her heart into her business. It can be much harder to quit than it was to start! But remind yourself: we might hear about the big success stories, but most startups fail. If your business isn’t taking off, then you have the chance to channel all that you learned into a new successful venture.
- Make sure your business plan includes a runway. If you haven’t taken off by the end of the runway, don’t keep driving! When I founded my independent wealth management firm, LexION Capital, my initial business plan included a runway of 3 years.
- Calculate your runway using the burn rate. How quickly do you burn through capital? This will tell you an approximate length of time for your runway, based on the resources you have. Remember: when making a financial plan, build in room for the unexpected to occur. You can always find ways to spend extra money, but running out of resources faster than you planned is a very different story.
Like this article? Check out my finance and entrepreneurship column on Inc.com!