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Ask a Pro: Closing Time

With businesses everywhere struggling, how do you decide if it's time to throw in the towel?

This story appears in the February 2010 issue of Entrepreneur. Subscribe »

Q:When is it time to call it quits?

A: What 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."

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