7 Key Factors Every Entrepreneur Should Consider Before Throwing In The Towel

packers-dont-throw-in-the-towel1b

packers-dont-throw-in-the-towel1bIn last week’s post, I shot a video discussing the battle of fight vs flight when entrepreneurs face adversity. Today I want to discuss 7 key factors every entrepreneur should consider before he or she decides to throw in the towel.

Though I don’t believe an entrepreneur should ever quit, I do believe however, that there are a number of reasons why a company may want to stop, re-assess their situation and re-gather.

A friend and former colleague, Daymond John from ABC’s, Shark Tank did this a number of times with his clothing brand FUBU. He shut down FUBU a number of times to re-gather and come back with a new plan. The result? … He finally got it right and now has shipped over 7 billion dollars to date. More on Daymond and his creative hustle, here.

In my opinion, you have to put your company through a litmus test to determine whether you have what it takes to continue, or whether it may be time to re-think, re-structure and change your plan.

Here are 7 Things every entrepreneur should consider before throwing in the towel.

1) Proof Of Concept

Many people believe disruptive products or services are the key to the kingdom. The problem with disruption, however, is that if you are being disruptive, you are most likely trying to create a market that is not yet proven, thus you have to establish the proof of concept in a new and unproven market.

Proof of concept is quite simply, evidence that there is a customer base for what you are selling. 99% of companies are not disruptive even though they may think they may be. Being innovative and being disruptive are completely different. The following is the Wikipedia definition for disruptive innovation:

A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.

Take a look at your brand and establish whether what you have created has a proof of concept.

If you have established a proof of concept (or you are entering a market that has already showed proof of concept) then I would advise against throwing in the towel. Perhaps you need to work on your differentiation, namely, what sets you apart from your competitors.

2) Traction

Much like proof of concept shows there is a market for what you are selling, traction shows that, not only is there a market for what you are selling, but that the market actually wants YOUR product or service compared to (or in addition) to your competition.

Too many people establish their product or service without the customer in mind. This is a huge mistake. I wrote a post about it called, How To  Brand Like An Idiot.

Developing traction doesn’t mean you need to put your product in a thousand stores, it simply means you have to put it in enough stores to show that your a product or service is something the market has a need for. More simply put, it provides further proof there is a customer for what you are selling.

If you have developed some traction, I would advise against throwing in the towel.

3) Distribution

After you have developed traction in the market, you need to expand your distribution enough to show that your product or service is scalable enough to make a living (and hopefully more). If your market is too small to make a living on, then you may need to re-think and re-strategize and develop a product or service that reaches a larger demographic.

To be clear, this doesn’t mean you have to create a product or service for a large demographic. Many entrepreneurs do extremely well with a very small market size however the smaller your market, the larger your margins should be on what you are selling. Which brings me to the next factor…

4) Profit

To reiterate, you don’t need a huge market in order to have a successful brand. There are many brands that have a small market and flourish because what they are selling has a high price ticket.  Someone who makes 1000$ profit on every sale and supplies 100 stores makes $100,000. A company, on the other hand, who makes 100$ on each sale needs to supply 1000 stores to recognize the same profit.

If you have a product or service that has good margins, have already established proof of concept, gained some traction and established some distribution, I would advise against throwing in the towel.

5) Revenue

The same math applies to revenue. If you sell 1 widget to 1000 stores for 1$, your sales are $1000. If you sell 2000 widgets to only 1 store for 1$ your sales are double even though you only supply one store and your competitor sells 1000 stores.

Whether your product or service is low ticket or high ticket, if you keep an eye on the margins to make sure your sales are above your costs and there is enough revenue to show the market wants what you are offering, I would recommend against throwing in the towel.

6) Brand Recognition

If you are a marketing driven company, increased distribution and revenue should increase brand recognition.

It normally takes a lot of hard work and effort to establish brand recognition. The more brand recognition you have, the less inclined you should be to throw in the towel.

Brand recognition creates the one word that every business loves… licensing. Licensing, in my opinion is the entrepreneur’s trifecta… It allows them to have someone else help grow their brand, spend the money to grow it and pay them a fat royalty payment at the end of the year …  I will talk about the value of licensing over the next few weeks.

If you have established any level of brand recognition, I would recommend against throwing in the towel.

7) Hip-Pocket Clients

Take a look at your customer base and take a look at those customers who are in your hip pocket. Hip pocket customers are those customers who support you no matter what. Remember, 40 customers in your hip pocket are worth a heck of a lot more than 400 customers who will drop you the moment your sales slow down.

If you have a good enough supply of hip pocket customers, I would recommend you don’t throw in the towel just yet.

The Wrap-Up

Take a close look at these factors above. If you have a number of these on the list checked off, there should be a way to continue on your path to success. Remember, every entrepreneur is going to come across a million obstacles in his or her journey. The key is to know when to keep pushing, compared to when to regather and re-assess.

What challenges have you been through that have made you want to throw in the towel?

What did you do to overcome those challenges?

Have a great day!

MJ

 

The Entrepreneur’s Dilemma: A Case study of Fight vs. Flight

FightOrFlight

Every entrepreneur will invariably have times when they think the cards are stacked up against them so high that their chances of turning things around are slim to none.

In today’s video, I discuss billion dollar giant Ecko Unlimited (Marc Ecko’s clothing brand), and BNW (my and Gary’s first clothing brand), and how different perspectives between the two produced two drastically different outcomes.

This is the first of a 2-part series of posts which will discuss how entrepreneurs react when dealing with adversity.

Note: To view all articles in this blog on startups, click startup advice.

 

Have a great day!

MJ

8 Powerful Benefits Of Being An Experienced Screw-up

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If you look at my twitter profile, you will see the words, “experienced screw-up.” I think a lot of people try to be very cute and gimmicky when trying to describe themselves. The truth is, I was just trying to be accurate. Truth be told, those are quite simply the two words that pop into my mind when I try to give a two-word answer to such a heavily loaded question.

Being an experienced screw-up in my opinion, is one of my greatest qualities and there are some very specific reasons why.

I do believe however, that the benefits of being an experienced screw-up is not specific to me in particular, but to anyone else who has insight into the powerful benefits of screwing up on a daily basis.

Here’s a list of 8 Powerful Benefits Of Being An Experienced Screw-up

1) Puts you in Constant Learning Mode

I used to think I had all the answers to anything and everything that people threw at me. As it turns out, I didn’t know sh*t. The upside? Well, for one, it taught me how to shut-up and listen.

Additionally, Having the knowledge that I know so little makes me crave knowledge with a passion and soak up as much information as humanly possible. The result? I end up learning infinitely more in the process.

2) Acceptance Of Failure In Advance

I mentioned in the last post that I heard someone at a meeting the other week say, “know that you will fail today.” The truth is, we all fail and screw-up at something every day.

Accepting the fact that you can AND WILL screw-up takes away the fear in advance and to me, that is a game-changer as learning how to overcome fear is one of the powerful conquests an individual can have.

3) Beats The Ego Into A State Of Humility

I love confident people. I love them almost as much as I hate egotistical pr*ks.

Knowing you are in a constant state of screwing up puts you in a state of humility. When you couple confidence with humility you hit the jackpot.

4) Proactive vs. Reactive

If you are screwing up that means you are being proactive as opposed to reactive. Translation: You are in the game.

Lebron James can AND WILL go the entire season with no screw-ups, not a single mistake… if he sits on the bench and watches everyone else play. Or… he can screw-up 18 of his 37 shots and score (at least) 38 points. Which do you think he would prefer?

I did an interview with Daymond john in Forbes a few months ago on how to learn from failure. One of my favorite comments that he made from that interview was, “if you’re not making mistakes you’re not making moves.”

5) It Reminds You To Get Help

Being an experienced screw-up makes you come to terms with the fact that you can’t do everything yourself. You need help. Everyone does.

When I screw-up enough at something I do one a few things. Either I keep trying until I get it right, OR, I delegate the responsibility to someone who has a better skillset in that particular area.

6) It’s How I Know What I Don’t Know

When Gary and I started our first business in college, I took the job as the designer and he ran the business side. As it turns out, I suck at designing and he is great.

What happened? We switched roles and built a great business… until we screwed up of course.

7) You Are Part Of An Elite Crew

The greatest entrepreneurs in the world have had and continue to have screw-ups. Here are a few experienced screw-ups you may know.

Jeff Bezos

THE SCREWUP -Amazon Auction

Bill Gates

THE SCREWUP- Traf-o-Data

Richard Branson

THE SCREWUP- Virgin Brides & Mates (Condom Company)

8) It’s Not Only Boring But Useless To Talk About How Great You Are

That one is self-explanatory but must be mentioned. I learn nothing from people who talk only about how great they are or how they succeeded without mentioning the screw-ups they made to get them to succeed… and if they say they didn’t have any screw-ups… they are full of sh*t.

If you are a reader of N2ITIV, you know I wrote a book entirely dedicated to my failure, entitled, How To Ruin A Business Without Really Trying. It is a 13 chapter 200+ page book filled with case-studies of all of my screw-ups. Then, AFTER I describe the screw-up, I talk about knowing what I know now, how I would go about things differently.

The goal is for aspiring entrepreneurs to learn from the mistakes of others (like me) so you can concentrate on the screw-ups you can’t avoid.

Final Thoughts

I encourage you to screw-up today, hopefully more than once!

Here’s your assignment (assuming you wish to take it)….

What is 1 thing you screwed up on in the past and how did it help you?

… Please, however, take note of one request… Normally I encourage people to answer me via email and it is getting a bit tough to manage. If you can, please use the comment section below. That way I can guarantee I will respond to all of your comments!

Have a great day!

MJ