When to Hold Them and When to Fold Them
Posted by Mark Martella on Wed, Dec 19, 2012 @ 1:15 PM
Some of you old enough to remember will recognize the title of this song from the Kenny Rogers classic regarding the old time poker player. The same is true for business. Whether it is a start-up or launching into a new area of business product or location, there always comes a point when the initial enthusiasm wanes, challenges are faced, and the issue becomes whether or not to move forward harder or fold your cards. When you are in the midst of these events, so to speak, it is hard to know which way to go. Down the road, the decision always looks clear whether it was a success or a failure.
A recent example in the sports world is this year’s San Francisco Giants. They looked like they were out of it in August. On the other hand, the Texas Rangers appeared to be a shoe in to make it to the World Series. However, the Giants showed tenacity in not giving up and ultimately becoming World Series Champions while the Rangers may have been reading too many headlines about how great they were and did not even make it to the Divisional Championship Series.
I previously addressed this issue talking about a book written by Seth Godin entitled “The Dip”. I was recently reading the Harvard Business Review blog and came across an article by Professor Rosabeth Moss Kanter who gave 12 guidelines for deciding “whether to hold ‘em or fold ‘em”. Her suggested guidelines are as follows:
- Are the initial reasons for the effort still valid, with no consequential external changes?
- Do the needs for which this a solution remain unmet, or are competing solutions still unproven or inadequate?
- Would the situation get worse if this effort stopped?
- Is it more cost-effective to continue than to pay the costs of restarting?
- Is the vision attracting more adherents?
- Are leaders still enthusiastic, committed, and focused on the effort?
- Are resources available for continuing investment and adjustments?
- Is skepticism and resistance declining?
- Is the working team motivated to keep going?
- Have critical deadlines and key milestones been met?
- Are there signs of progress, in that some problems have been solved, new activities are underway, and trends are positive?
- Is there a concrete achievement — a successful demonstration, prototype, or proof of concept?
Hopefully these will give you some guidelines to make a decision if you are facing a challenge as to whether or not to continue a project or business. Often times in consulting with small businesses regarding bankruptcy, it was clear a year or two earlier that they should have closed the business. However, instead, they drained their 401-K’s or put mortgages on their home and used non-exempt assets they would have had to get a fresh and used them going “all in” on a bad hand to start with. It is my hope that you will not make similar mistakes.
Contact a Professional Business Attorney
If you have a situation as we described in this article and have questions or concerns, please do not hesitate to contact us to answer your business law questions.