Entrepreneurs
How to Know When to Move on From a Business Idea
We all have “lightbulb” moments from time to time. As an entrepreneur, you’ve made your living off of turning these moments into business practices. Whatever the case, every idea has a lifespan. At some point, it’ll either work for you or it won’t. If it’s not working, then you need to know the right time to move on. Otherwise, you’ll pour your time and resources into a bottomless pit.
Sure, there’s something to be said for persistence, but sometimes persistence can just lead you further down the wrong path and cause you to bang your head against the wall. We’d like to help you prevent that!
Here are 4 signs that you should move on from a business idea:
1. You’ve Completely Lost Your Passion for It
You no longer have the fire you used to have for the idea. What started out as a passion has quickly dwindled to the point where everything about it feels like a chore. You can’t see yourself working in the industry or on the idea for much longer – and certainly not for the amount of time it’ll take for it to become a lasting success.
You can keep plowing forward and ignore this lost passion, but it’ll chip away at your happiness and start to sap your energy, even if it has the potential to become profitable.
“Do what you love. Know your own bone; gnaw at it, bury it, unearth it, and gnaw it still.” – Henry David Thoreau
2. The Profit Margin is Too Low
Low profit margins create low margins for error. This becomes even more problematic when you’re dealing with tough competition in a potential “race to the bottom” of pricing. If the profit margin will be too low and you can’t figure out a way to increase it, perhaps through negotiation with potential vendors or cutting out some other part of the cost, then the idea may no longer be worth pursuing.
When calculating profit margin, make sure to calculate the net profit margin. This takes total sales and subtracts it by business expenses. Keep in mind that profit margins will vary from industry to industry.
3. You Can’t Validate It
If you struggle to validate your idea, it’s a sign that people probably don’t want or need it. For example, if you run Facebook ads to a landing page with an email opt-in to learn more about your idea, and it generates hardly any clicks, then people may not be interested.
You can try other mediums for testing and validating your idea. You can even try to “pre-sell” it, so that you get sales before you even move forward with creating it. But if all of your attempts see lackluster results, then listen to what the market is telling you. They don’t want your idea in its current state. You can either pivot and tweak your idea, or move on to something else. Because if you start pouring your resources into an idea like this, you’re bound to lose on that investment.
4. It’s Confusing
Can you easily explain your idea to potential customers and others in few sentences? If not, then it’s probably a little too confusing. Confusing ideas struggle to achieve large customer bases, because they struggle to invoke desire in customers. How can somebody want a product or service if they don’t understand what problem it solves, or what it actually does?
If your idea is confusing, you should work to simplify it and create an “elevator pitch”, then test it out by explaining it to people. If that still doesn’t work, then it may be time to move on to something else.
“Don’t find customers for your products, find products for your customers.” – David Ogilvy
You shouldn’t take every idea and use it. Instead, you should realize when it’s time to move on from one idea so you can devote more resources to your next endeavor. It’s hard to move on, especially if you’ve invested a lot into your idea. But if you see any of the signs we’ve listed here, then it’s time to move forward.