Pulling the Plug

“You don’t go broke taking a profit.” – J.P. Morgan

When is it time to shut down the business? When is the idea or the brand not really a business? What does it take to realize that as the entrepreneur behind the wheel? When is it time to pull the plug? These are the questions Jerry and I dive into in today’s Operators Manual episode. We touch on the perils of scaling and growth without a drive for profitability. 

One of the six challenges of leadership Jerry often talks about is overcoming delusion. Delusion clouds our radar and our antennae and our inner compass in as many ways as it can wreak havoc on our teams, organizations and businesses. Some entrepreneurs delude themselves thinking they have a viable business, yet fail to face the realities of low sales, little revenue, and a shrinking runway. 

Where might you be deluding yourself and the team? Obviously, consciously deceiving your team and your investors are wrong. Delusion is different. Are you willing to face the hard questions and face reality? Pretending that the team is working well, that the product works, or that you know what you’re doing isn’t a good game plan. Does the product work? Are you going to run out of cash? Is this a viable business? Where do you need to tell the truth? 

There can be so much tied up for us in our business–our identity, our fear of failure, our worries about reputation. All of this can make facing the reality of a business that’s not working easier to avoid and harder to take to task. In her book, When Things Fall Apart: Heart Advice for Difficult Times, Pema Chodron reminds us: “Fear is a natural reaction to moving closer to the truth”

In a podcast conversation from a few seasons ago, former founder Avni Patel Thompson talked to Jerry about the grief that followed the closing of her company. It wasn’t until someone asked an innocuous question – Are you okay? – that she touched in with all that she had still been processing around the shutdown. “When you shut something down, or it goes away, it can feel as if it never had value,” she shared. If you have just gone through a shutdown, or feel one is near, you may find some gems in this conversation as well.