For Subscribers

Ask a Pro: Closing Time With businesses everywhere struggling, how do you decide if it's time to throw in the towel?

By Jennifer Wang

Opinions expressed by Entrepreneur contributors are their own.

Q:When is it time to call it quits?

A: What business isn't struggling right now? But still, there are some red flags:

You find yourself positively spinning--or outright denying--the negative numbers.
Entrepreneurs tend to be optimistic, and in the face of bad results, there's a tendency to think, "Just a bit longer." But Barry Staw, a professor at UC Berkeley's Haas School of Business who has studied how organizations often escalate commitment to failing endeavors, warns: "Don't be the person who needs to be hit over the head with a sledgehammer. The longer you keep going, the harder it will be to withdraw--and the more money you're probably going to lose."

Nobody else thinks it's a good investment.
Would you put money into the business as it is now? Ask others for an honest answer and take the nos seriously. "You should never sit on a stock unless you're willing to put in new money for it, and the same thing goes for a business," Staw says. "Many entrepreneurs have both successes and failures under their belts. There's no point in betting your whole entrepreneurial life on a single venture."

You passed your "quit" threshold a while ago.
Every business is different, so there's no universal cutoff that marks when you should call it quits. But while things are good, impose a limit on yourself (number of months in the red, a total debt amount, the moment you consider dipping into your kid's college fund). Write it down and stick to it. Otherwise, you'll keep changing your story. "It's far easier to make logical decisions before things start falling apart," Staw says. "Remember, an intelligent retreat isn't the same thing as failure."



You Should Know

Mary Schapiro
Age:
54
Title: Chairwoman of the Securities and Exchange Commission

Why you should care: It's been a year since President Obama tapped Schapiro to lead the SEC, and the George Washington University law school grad has a lot of work ahead of her--the nation's most powerful Wall Street watchdog is still roundly criticized for not stepping in to prevent the banking industry's 2008 collapse. Many think Schapiro, the first woman in the SEC's top spot, has done a decent job so far: She implemented reforms to boost transparency and is moving quickly on high-profile fraud cases. But Schapiro, who has served four U.S. presidents and held key regulatory positions before the bailout, is not without critics. They blasted her for appointing one of Bernard Madoff's sons to a regulatory board, as well as receiving a compensation package topping $3 million in 2007, when she helped merge the NASD and NYSE regulatory bodies into the Financial Industry Regulatory Authority. That also means she took a multimillion-dollar pay cut when she took the $158,500 SEC job.

Memorable quote: "I had always assumed you were either a natural-born leader or you weren't. And if you weren't, too bad, that's your lot in life."

Jennifer Wang

Writer and Content Strategist

Jennifer Wang is a Los Angeles-based journalist and content strategist who works at a startup and writes about people in startups. Find her at lostconvos.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Health & Wellness

What This Founder Thinks Most Supplement Brands Get Wrong—and How He Fixed It With David Beckham

5 lessons on how to bring trust and transparency into a controversial industry.

Business News

Microsoft Claims Its AI Is Better Than Doctors at Diagnosing Patients, But 'You Definitely Still Need Your Physician'

Microsoft AI CEO Mustafa Suleyman says that the AI tool is one step closer to providing high-quality medical advice for Copilot and Bing users.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Growing a Business

He Started a Business and Ended Up on the Brink of Bankruptcy. He Fixed His Mistakes – and Now Teaches Entrepreneurs What He Wishes He Knew When Starting Out.

Discover how Joe Crisara transformed decades of trial and error in the home services industry into a blueprint for success.

Side Hustle

Tired of 'Culturally Obtuse' Products, This 27-Year-Old Took His Side Hustle From $1,000 a Month to 7-Figure Revenue: 'Pick the Right Opportunity to Pursue'

Victor Guardiola of Austin, Texas used skills he'd learned working at a startup to launch his own consumer packaged goods business.