I am an entrepreneur based in San Francisco who has spent 3 years building a healthcare-related company. I have dropped $150K into the product. I have a few customers but no traction. I feel like giving up, but $150K is a hell of a lot of money to have put in.
I help B2B companies find their most profitable customers. This a tough spot with no cut and dry answers. I would ask the following:
- There's a lot of things I could do, why did I choose to do this? Think of this as a gut-check to gauge whether you want to push through or not.
- Define 'no traction' with customers. What was the reason they originally bought from you? What problem are you solving for them today? You can find this out by calling and asking.
- Can I be cashflow positive just providing them what is of value?
If you're getting positive answers to each of these questions, keep going. Not every products needs, or can have, a hockey stick-like growth chart with customers.
Finally, I would pretend the $150k investment didn't exist and I still had the customers and product I have today. What would I do with the product? The more you invest in something (emotionally and financially) that harder it becomes to abandon it. This is known as the 'sunk cost fallacy.' Stepping away from it can provide much needed prospective.
Feel free to give me a call if you'd like to chat more about your specific situation.
I have had similar questions. For myself I am technical although not a developer and having to hire developer consultants, manage the product, advertise and all the other items the go with being a founder. The biggest challenge he been hiring developers I can afford who will actually do the work with quality.
So, yes I have had these same questions however when I get businesses registering or emails asking if my system does "ABC" I know I am building the right product and it's just the time the developers are taking to get it done which is my main issue.
When I go to conferences I get great response from people. www.simplyappointments.com
My latest issues have been development staff and trying to get the development complete to guide the customers for configuring the system.
For my situation I am over the hump and just cleaning up loose ends to make it easier for people to use.
So for yourself, are people going to find your product useful and will they pay for it?
Please reach out anytime.
Tough question. There are many underlining questions that need to be asked. For example what is the market need for your product, if you have customers and they are satisfied, why are you failing to gain traction. How effective is your marketing and business development. In my mind you have to determine is what has to happen to attain the goals you set that will define success. $150,000 is a lot of money, but you don't want to walk away if you are close to making it. The other side is you don't want to invest another. $150k and be no further along
In our business we always point to a day two years in where our accountant said "well you have made a good go at it, but you just aren't going to make it and should go look for jobs." We were so sure and committed that we doubled our effort. Telling us to quit was the best thing he could have done because it forced us to figure it out. Years later when we sold the company to a public firm, this same accountant worked with us on due diligence. I reminded him of the conversation and let him know he was wrong.
If we can help, don't hesitate to set up a call.
My 1st recommendation is to not make a decision like this on the spot. Being an entrepreneur means suffering ups and downs and if you happen to have a bad couple of days, it can put you in a mood where you can't see things clearly. And thinking clearly is the most important thing.
2nd, take a week off. If you can afford it, go someplace completely different where you're doing something different than your normal routine. The most important thing: do not work on your startup. This will break you out of any habitual thinking patterns you're in.
Then 3rd, during that time, check in with yourself and ask yourself what your next step should be. Can you realistically envision a path to profitability? Give yourself several days to think about it and come up with the answer.
If the answer is "no', then you owe yourself a favor to get out. Yes, you spent a hell of a lot of money, but even more expensive is the time. And spending even more money and time is not going to help things. Freeing up your mind from the startup might be exactly what you need to see the next opportunity or idea, which will be successful.
Or maybe you might come back with the answer that "maybe" this can work, if you can overcome a few obstacles. When you get back, work immediately on seeing if you can overcome those obstacles are not. Then after 2 weeks or so, reevaluate again honestly with yourself.
I'm a serial entrepreneur and have been through this process many times. If you can use any assistance, let me know.
Best advice I've ever received:
"Never throw in the towel because of exhaustion. Throw it in because the model doesn't work."
Until you prove the model doesn't work, keep going.
I nearly gave up, without proving my model did not work, weeks before I raised $100,000 in funding. I'm glad I listened to this advice and kept pushing, even through the tough and discouraging times.
It's easier said than done, I know. I've been there. You know how to reach me if you need me.
Seth Godin in his book "The Dip" said: "You don't have the courage to quit".
That is a reframe on how most entrepreneurs view "quitting" or "giving up".
The point you should give up is when you consider four things.
1. Your mindset and passion for the project
2. Your metrics
3. Your market
The passion is extremely important because it fuels everything else in your business. If you don't have a positive mindset believe in what you're doing with full commitment and total un-resolve, you need to examine that first. 75% of success in business is mindset only 25% mechanics.
Second are your metrics. What are your K.P.I's? How are you viewing each one and what is the result you want to achieve in a specific time period for each one? Often it's easy to let passion take over the intellectual side of your business which are the metrics. You need to have balance and awareness of these things.
And is your market ripe for addition to it or are you betting on "hope"? How much have you accumulated to payback your investment? Are you growing each month or falling further behind? What is your market telling you they want or have the greatest challenge and desperately need a solution? What is their pain? Solve this and they will love you.
Lastly is your message. What is your USP (unique selling proposition)? How are you different from the others and what makes you so needed and desired that people love to talk about your product and services? Can you sum up what you are about in 10 words or less?
Work on these things first before you even consider giving up. If you are full throttle meaning scale of 1-10 you are hitting all these at 9 or 10 and still not seeing results. It's probably a good idea to look at another angle, market or product.
I hope that helps.
Remember... be a servant,
Never. If you go into a startup with any other mind-set than your going to make it work "no matter what" you will never survive the grind.
Unfortunately, this is, by far, the norm, not the exception. Most startups have this outcome. I have advised numerous entrepreneurs, and had to make the very same decisions myself - more than once. It all comes down to market potential. Does the product solve a problem/need that the market demands. After 3 years, if your product is substantively developed, does it solve a problem/need - really, does it? If it doesn't, either pivot to get it there or abandon. If it does, why aren't customers knocking down doors to get it? It is likely due to sales/marketing not working effectively (bad value proposition, pricing, business model, poor sales people, etc.). Either way, the market is speaking loudly right now to you...change asap or abandon. If you would like to discuss your specifics or ask follow on questions, I would be happy to help further.
Warren Buffet says you should never give up on a company. Simply change the leadership. If your product has no traction that means you need to restructure your marketing efforts.
Of the 150k you dropped in the product, how much was spent on marketing. What channels are your competitors using to market and are you using similar methods to meet the preconditioning of your market.
If you are breaking into a new market then your marketing cost will double. You may have to give products away, guarantee results and money back, etc. or get someone famous to recommend it.
Last but not least you can try to move your product via sales affiliate marketing.