Closing Shop: Why I Decided to Throw in the Towel
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"Before success comes in any man's life, he is sure to meet with much temporary defeat, and, perhaps, some failure. When defeat overtakes a man, the easiest and most logical thing to do is to quit." - Napoleon Hill
Admitting defeat or accepting failure is never easy. Learning from each is vital. Thought leaders for generations have struggled to understand why failure is so crippling and how to successfully recover from it. For entrepreneurs, it's no different. As a young entrepreneur, when you have spent such a large percentage of your life building this concept -- your baby --bringing it to life, eating, sleeping (rarely) and breathing it, failure can seem to take on monumental significance.
I was first hit by the failure bus this year when I made the decision to close the doors on my first big entrepreneurial venture: My restaurant Green Bean Salads. I opened my salad shop during my junior year in college and ran it for two years.
In the end, the decision to cut my losses and close up shop was made in a heartbeat. The light bulb finally went off in my head: It had to be done. Although the final decision to pull the plug came quickly, it was precipitated by months of struggling, weeks of discovering all of the things we were doing wrong and analyzing the many factors that were just plain out of my control.
That instantanous moment I knew it was over arrived as I opened my laptop to check my personal bank account. The month prior, I had started a full-time job working for "the man" to gain some large corporate experience and save up cash. Yet, somehow, my own account was still shrinking due to the need to pump my business with additional capital for survival.
When the light bulb finally triggered, I emailed my parents in the middle of the night to tell them I planned to close the restaurant. I wrote up some talking points for preparing to close the business, and why I was choosing to do so. I shut my computer, turned off the lamp, and cried.
While there are many factors that contributed to Green Bean's ultimate demise, I want to focus on the factors that truly helped me understand that it was time to walk away.
Missing the mark on volume projections. After almost two years in business, we weren't close to hitting our initial projections for daily foot traffic or monthly revenue. It was easy at the beginning to blame the miscalculations on the lack of awareness in the neighborhood, the weather or students being home for holidays. We believed that even if our revenue was off, if we adjusted our variable costs to match, we could be profitable. Finally, it was time to admit our projections were so far off, it was nearly impossible to survive. The market in our location seemed to be just too small to support our niche concept.
Expenses exceeded revenue. While its normal for a newly launched business to have expenses outpace sales, a business can't surive forever if there is no profit.
For months, we pored over the numbers, trying to understand why expenses were so high. Early in the life of our business, we endured some internal problems that prevented complete financial visibility, causing us to later struggle to understand our margins and financial position. Once those kinks were ironed out, it was clear our expenses were still far too high, and we realized profitability would require a minimum level of scale, which we had not obtained and couldn't project if or when we would.
A decline in passion. After months and months of cutting costs and brainstorming marketing ideas to bring in more traffic, it was hard to feel motivated to move forward. Walking into work and seeing my employees working so hard for the business became painful, knowing soon they might not have a place of employment. Partner meetings became stressful, as we racked our brains for ideas that might save a business we had grown to love so much. Hope was a wave we could ride only for so long.
While it was tough to admit it was time to walk away, it was softened by the certainty that this was just the first of many exciting projects in my career. As an entrepreneur, I will never stop working, inventing, innovating and learning. Before the doors were shut on my first big-time venture, I had already begun a new business plan, joined as an adviser to a growing startup and invested in a media company.
That said, saying goodbye to the business, the people and physical location was very difficult. But like the sting that remains after a messy breakup, eventually the pain dissipates. Each time you tell the story, share what you've done and discover and rediscover how much you've learned, it becomes more clear that failure really isn't the right word at all. Closure, maybe. The doors are closed, but the lessons learned and experiences gained are forever ingrained. That is entrepreneurship and that can never be seen as failure.