When to Pull the Plug on a Start-Up

As a panelist today at an entrepreneurial forum I was asked a very interesting question by a member of the audience, “how do you know when it is the right time to pull the plug?” Not only a timely question given the current market conditions, but a great question that any entrepreneur should consider fairly early on in the development of a new company.

Start with the End in Mind

 There was a great article a few weeks ago in the Harvard Business Review by David I. Collis, Michael G. Rukstad titled (Can You Say What Your Strategy Is? ).  The article highlights that “most executives cannot articulate the objective, scope, and advantage to their business in a simple statement.  If they can’t, neither can anyone else.”

So how does an organization develop a successful and clear strategy?  With the end in mind.  Not a literal end but a place in the future no less than three years and no more than five years away.  Anything less than three years does not provide enough time to deal with the real challenges and changes that will be needed to be successful.  Anything more than five becomes un-grounded in reality because there is so much evolution in the marketplace driven by the advance of technology.

Entrepreneurial Activity Grows in 2007

According to the latest Kauffman Index of Entrepreneurial Activity, 495,000 new businesses per month were started in 2007 with 0.30 percent of the adult population (or 300 out of 100,000 adults) involved in the startup process. This entrepreneurial activity rate is a slight increase over the 2006 rate of 0.29 percent.

New Kauffman Foundation Study Offers Insights Into the Earliest Years of a New Business

Kauffman Firm Survey findings provide insights for policymakers interested in encouraging new business development and growth(KANSAS CITY, Mo.) March 12, 2008 — Understanding the characteristics of new business formation and sustainability can help lead to policies that encourage entrepreneurial businesses, which are a major driver of economic growth.

Entrepreneurship: US dependence on Foreign Minds

By Chris Dornfeld for Biotrends, Nov./Dec. 2005

A recent report by the Kauffman Foundation highlights the “substantially higher rates of entrepreneurship among immigrants as compared to U.S.-born individuals.” (1). This should come as no surprise if we think about what type of person would be willing to uproot and travel to a new country in pursuit of a better life. But what is interesting is how little attention is given to the recent contributions that foreign-born nationals make to the U.S. economy.