LC029: When Startups Fail

launchpeer - July 5, 2018

Today’s question:

Today’s question comes from Chad. How do I know when it’s time to kill my startup? I have about 20 pay customers and $1,000 in MMR, but I’ve failed to get my product into the hands of people not in my immediate network. Even if it’s not time to kill it yet, how do you know when it’s just not going to work?

Jake’s answer:

In Chad’s particular situation, it’s not time to kill his startup.

You’ve Got Money

If you’ve got people giving you money, you are doing ok. People hate to give other people money. Not long ago, I tried to start a membership community. It was free for a long time, but when I tried to ask the community to pay for the service, people did not want to pay for it. It’s difficult to separate people from their money, so if you do have revenue, then it’s not time to kill it.

It's difficult to separate people from their money, so if you do have revenue, then it's not time to kill your startup. Click To Tweet

Rather than kill it, it’s time to go out and find someone who can help you grow it and get it into the hands of new customers. Know your strengths and weaknesses and then find someone who can fill in the gaps. In this case, it’s finding someone who’s good at marketing and sales. You can even bring on a service such as Launchpeer to help get things rolling.

In addition, talk to your 20 customers. Why did they opt-in to use your product? Why do they keep using it? Finding that stuff out will help you update your sales pitches, brand messaging, etc. That’s a cycle you need to continue consistently.

How do you Know When to Kill It?

If you can’t get any customers at all, then it’s time to kill it. If you run out of money and don’t have enough to support the customers you do have, then it’s time to close up shop. Those are black and white situations.

The grey areas are harder. There are a few warning signs you can spot:

  • Consistently unhappy with your business. Yes, building a startup is a roller coaster, but if you are unhappy even on the highs, then it’s time to close the doors.
  • Obstacles you can’t overcome. Whether it’s some kind of government regulation or amount of money you need to raise, if you try everything you can to overcome the obstacle with no luck, then it might be time to throw in the towel.
  • It’s not what you want it to be. If you are at a point where you just aren’t feeling like it’s going the direction you want it to go or not growing the way you want it it, then it could be time to pivot. And if you pivot and it’s still not turning out how you want it to,
  • A big competitor gets into your space. If a well-known competitor gets into your space, it may be time to jump ship. For example, a company had made the first calendar for Gmail but then a year later Google just created a product. That’s a tough uphill battle to fight.

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