How Do You Know When It’s Time To Fold?
Last week I announced that Glassboard will be going out of business as of November 1, because I was unable to turn it into a profitable business. There are a lot of different things I want to cover eventually about the past year I’ve spent working on this thing. For one, it’s therapeutic to me to get it out of my head. Second, my hope is that people can learn something from my successes (yes, there were some) and failures (those too).
I knew going in that Glassboard was a moonshot. I was in essence taking over a platform that was run by six people with stable salaries from a parent company and doing it by myself, while trying to shift what turned out to be the titanic away from the iceberg.
Running any business, large or small, is mostly about managing risk. You want to invest in the things that will grow profits. Startup culture skews this in our industry, because venture capitalists are willing to assume near-term losses in favor of potential long-term riches, but for our purposes, let’s assume we are building a business like our parents made. The goal is to spend less than you are bringing in.
I am a terrible Blackjack player, but I know enough to be able to play on a few hundred bucks and have some fun. If you’re under 12, you want to take another card, because you’re really not going to hurt yourself. If you’re over 12, you’ve got to start figuring out what cards have been dealt already from the deck and determine if its worth the risk of possibly busting or not getting a high enough count to beat the dealer.
Despite being terrible at Blackjack, I play it fairly conservatively and don’t stray from those two rules too often. I try to run my businesses in the same way. Second Gear and Glassboard have always been small shops that are run with the intent of supporting me and if it grows beyond that, great.
I knew the risk of taking on Glassboard up front would be how much money it was losing each month in sunken hosting costs (not including development and design time). I projected a few different scenarios for good, great, and ‘make it rain’ levels of growth to get the business out of the red and towards profitability.
Despite cutting the monthly losses by 80% from the time I took over to today, I never fully got to that break even point and began to realize that getting there and beyond was going to require a lot more hard decisions and evaluation.
So, how do you know when you’re done and it’s time to fold? When you start thinking about shutting things down, you’re done. There may be a Hail Mary out there that could possibly save the sinking ship, but my guess is that it will only prolong the inevitable.
For me, I knew for sure last Thursday that I was done. I realized it was going to be another $60,000 or so to turn Glassboard into the product that I thought it could be eventually. There was no way I could do that emotionally, mentally, or financially. The risk was too big. I announced the next day I was cutting my losses and shutting the service down.
Glassboard was a gamble that didn’t really pay off financially (no, mom. I am not losing the house), but it was still rewarding in a lot of other ways. Hopefully those will become apparent over the next few weeks as I dump all this out of my head.
