How Do I Know If My Business Has Failed Or If I Should Keep Going?

Somewhere between determination and denial, every entrepreneur hits a tough moment and asks: am I building toward something worthwhile, or am I holding on to something that's already over? When you've poured your time, money, and energy into a business, it's incredibly hard to know whether the right move is to push forward or walk away.

• 0:01Speaker 00

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• 0:30Speaker 01

  These days, you can get an answer from the internet, an influencer, or AI in seconds. But when it comes to legal matters for your business or your family, a quick answer is not the same as the right answer. With 25 years of experience, LegalZoom knows how to start you off right. When you need a legal hand, visit LegalZoom. Go to LegalZoom.com to get started. LegalZoom provides access to independent attorneys and its law firm, LZ Legal Services. LegalZoom is not a law firm and does not provide legal advice. How do I know if my business has failed or if I should keep going? That's today's question here on Q and A Wednesday. And to be honest, it's one of the heaviest ideas, questions that entrepreneurs have to ask themselves

• 1:11Speaker 01

  more often than they like to ask themselves, because it means that things are not going so great. And I want to give today's kind of takeaway right from the top, and we're going to talk about how to implement this takeaway. But there's one question that I like to ask myself if I'm ever in this situation. And here's the question. If you could take back all the time, all the effort, all the money that you spent on this business that you're questioning, and you could have it all back, would you still keep going? And that tells you a lot, that question. And what you do with that answer is what we're going to be walking through in today's episode. Nicole, of course, is with me again here on Q and A Wednesday. Nicole is the executive producer of the show. She's my co-founder and my wife, of course. Nicole, thanks for being here.

• 1:54Speaker 02

  I'm always happy to be here. Thank you, Omar.

• 2:02Speaker 01

  Welcome back to the $100 MBA Show. I'm your host, Omar Zenhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday, to help you start, grow, and scale your business.

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• 2:39Speaker 02

  I think this question that comes from Michael today takes a lot to say out loud. So thank you, Michael, for sending this one in. Michael asks, how do I know if my business has actually failed or I just need to keep going? I can't tell if I'm being persistent or if I'm being stupid. It was hard to say that last word, and that line really gets me. What do you say to Michael?

• 3:01Speaker 01

  Yeah, that's exactly the fear. I mean, that's the fear that we all kind of go through at some point in our business. It's like, did I back the wrong horse? Did I make the wrong bet here? And that's okay. I want to say that it's okay to have this experience. Everybody celebrates the founders and the business owners that have pushed through and persevered and won, but no one really talks about the graveyard of businesses that a lot of people have to have in order to find that winning business, to find the business that wins. And today, we're going to talk about like, how do you actually know if this is one of those businesses that's going to end up in the graveyard? Or, and I should just like cut my losses and move on with another business?

• 3:42Speaker 01

  Or this is something here, I have some potential, I should keep going, I should keep persevering?

• 3:47Speaker 02

  And it's a question of that grit and persistence.

• 3:50Speaker 01

  Yes.

• 3:50Speaker 02

  It's such a fine one. I can't wait to hear how you unpack this one.

• 3:54Speaker 01

  Yeah, and what I want to give Michael and everybody listening is more than just a feeling, right? A lot of this is just feelings. I feel burnt out, I feel like this is not working, I feel like this may not be the thing. Or I feel like maybe this thing has a chance. I want to give you more than a feeling. We're going to give you some numbers, we're going to give you a strategy, we're going to give you a framework that you can follow so that you're a little bit more objective about this. So I mentioned at the top that the biggest takeaway is asking yourself the question, hey, if I can get all my money back, all my time back from all the things I've invested in this business that maybe I'm questioning, maybe it's like two years of time and effort and money. If you can have all of it back, would you continue the business regardless? Like, that's a good framework, because a lot of us, we make decisions based on sunk costs. Like, let's say if there is no sunk cost.

• 4:39Speaker 01

  Let's say you had everything back and you're back to zero again, and nothing was lost. Would you still believe in this business? Would you still want to continue? And this is a reoccurring theme we're going to be talking about, this idea of sunk cost and the sunk cost fallacy. It's like, do I put good money after bad money? And do I like into a business that maybe is not serving me anymore? We're getting into that. So there are five steps to this strategy to really nail down, is my business failing? Or is it something that I should keep going with and should persevere? So step one is my favorite step, and it's because it's easy. And it's that the numbers don't lie. Numbers do not lie, okay? And this is what I love about business, is that there's a lot of objective signals

• 5:24Speaker 01

  that you can use to make decisions. So I want to start with the trend, not a bad month. You could have a bad month. Maybe your business is seasonal, maybe sometimes it's down and sometimes it's up, and you're expecting it. But I'm talking about a trend, a direction in time. And the way I want you to kind of look at it is that anything that exceeds three months is really a trend, is really something you need to pay attention to, right? Anything less, it could be an aberration, it could be a bad month. You could have had something going on personally in your life that's affecting the business and its numbers. And when I say numbers, I'm talking about like your revenue, right? The numbers that actually grow the business. So you have some time, there is some grace period here. So if you're just starting out, it's been like a few weeks, that's not enough time.

• 6:08Speaker 01

  You need a little bit of time to see if there's a trend growing, if there's something happening on a consistent basis.

• 6:13Speaker 02

  I think trend is the key word here. And I can't remember how it's phrased normally, like, once is once off, but twice is a pattern? Or you're saying three months at a minimum is a good enough time to see?

• 6:25Speaker 01

  To see if this is something consistent, right?

• 6:27Speaker 02

  Numbers trending down, numbers trending up.

• 6:30Speaker 01

  Right, and especially, it depends on the business, of course. But I know in the services, a lot of people, it's a bit of an on and off switch. They spend a lot of time getting business, and then they have to fulfill that business. So those months are kind of slowing down because they're not gaining customers. So it's a bit of an up and down there. So like, you have to be mindful of like, you've got to be fair. You can't just like say, oh, well, I made more money last month than this month, so this must mean my business is doomed to fail. No, you have to give yourself a little bit of leeway to see if this is actually moving in the wrong direction. Now, what if it's beyond three months? Like, I believe that six months, and you're in a really serious territory where you really might have to realize that I don't have a winner here. Or like, it's six months of losses, six months going in the wrong direction.

• 7:15Speaker 01

  I'm not talking about like, one month is up, one month is down. I'm talking about like, you're continuing to make less and less money, or having less and less customers, and it's been six months since your best month. It's not so great.

• 7:26Speaker 02

  So you said this, it's about revenue. We're purely looking at revenue here, because it could be leads, it could be the customers you're talking to, it could be prospects, your leads.

• 7:36Speaker 01

  Yeah, I'm talking about money here. I'm talking about revenue, and sales cures all things in business, okay? If you have, if you're making a good enough revenue, you can make hires, you're not going to get burnt out, you can invest in marketing, you can get more sales and get more salespeople, you can get an office, you can invest in so many things, right? But if you don't have revenue, and business is money, like, I know we like to do things because we want to put something in the world, we want to express ourselves, and that's all good, and we should have that. But in order for you to stay in business, you need revenue. And if the revenue is not there, and it's gone beyond three months, now we're in the six-months territory, something fundamental needs to change. It's not a tweak, it's not a little small, you might have to change direction, pivot,

• 8:19Speaker 01

  change your audience, change your product, your offer. You need to start taking this seriously. Now, I have to mention this, because some people wait until a year has gone. So if a year has gone, and the downward trend, like the chart of your revenue is going down, it's not going up and down, it's not going up, up, up, up, and then a little bit down and up. No, if it's just going down straight like a slope, you're cooked. Okay, I'm sorry, but that's the honest read. And from a revenue standpoint, your business is just not sustainable, right? You're not going to be able to continue to run your business in a profitable way for very much longer. It's pretty amazing that you're still in business. So a lot of us, we wait too long to take action, because we want to hope that things are just going to change.

• 9:03Speaker 01

  Things are going to just change miraculously, and things are going to turn around. This is what I've found in 20 years of business. It never just changes. It never just changes on its own. There's something that you do that makes it change. Like, when you change something in the business, when you change your audience, when you do a new marketing strategy, when you start posting more on social, when you do something, then something changes, either for the good or for the bad. But it doesn't just change on its own.

• 9:27Speaker 02

  So even if like the numbers are trending down, and you're measuring those variables, so you're changing a marketing strategy, you've made a pivot or a change to your product or service, you're monitoring that, even with those changes, it's still trending down? That's what you're saying, right?

• 9:44Speaker 01

  I'm saying that, but I think, I think a lot of people, they don't even get to that point. Like, a year has gone by, things are not looking good, and they're just hoping things are going to just turn around. People are going to learn about their business, so people are going to start walking through the door. That's just not going to happen if you don't change anything. Like, you're getting the results right now, given the inputs you're putting in, right? Given the action you're taking right now in your business, that's the results you're getting, right? Want different results, got to do different actions. This is how it works. And it's easy to say this outside looking in, but I've lived it. And I've lived that life where it's just like, I'm hoping and wishing, and then I realize, I get frustrated, and I just do something, and then, oh, something happens now. And I'm getting more business. Funny thing about action.

• 10:24Speaker 02

  Right, we've lived this experience and I know we'll touch on it a little bit later on. So we definitely are speaking from experience here as well.

• 10:31Speaker 01

  Yeah, and I do wanna mention that, you know, most people that we serve here on the podcast are small business owners. We're not talking about big corporates, right? Because there's a lot of companies that have funding and then they can have no revenue. They can have a down quarter, six months.

• 10:45Speaker 02

  Right.

• 10:45Speaker 01

  Because they're investing in growth. They're not really worried about making money. But we're not talking about chat GPT and OpenAI, right? We're talking about businesses like you and I that are trying to make a healthy living, millions of dollars. But we have to do it sensibly and see what's happening in the marketplace. Are we making money with what we're offering? So there are small businesses that grow healthy and there are big businesses that are dying.

• 11:08Speaker 02

  Right.

• 11:08Speaker 01

  It happens all the time. And this is all to say that really the direction your business is moving and the revenue and your profits is really what matters. That's really what you need to focus on. This is what I mean by the numbers don't lie in step one. Like, just trust the numbers. Let the numbers tell you if, hey, this is worth continuing. And I wanna also say that, like, you need to be rewarded somehow. You need to make sure that, like, hey, this business is actually serving you. The whole point of becoming an entrepreneur is that it's a vehicle to have freedom and independence financially. And if it's not doing that for you, then that's not an even exchange. We had Ramit Sethi one time on the podcast recently and we were in Tokyo. And he said something on that that really resonated with me as a business owner. He says, every business owner needs to say, what am I getting?

• 11:53Speaker 01

  Have your hand out, palm out. What am I getting in exchange for all my hard work and sacrifice and money and time and effort? At some point, the business needs to pay you back.

• 12:02Speaker 02

  Yeah, because it's hard to sit in those downward slogs and those moments.

• 12:07Speaker 01

  Right.

• 12:08Speaker 02

  For a long time. It's fine for a short term.

• 12:11Speaker 01

  Yeah.

• 12:11Speaker 02

  You know, short burst, but you can get through it. But to sit in that for a long time, yeah, it's tough.

• 12:17Speaker 01

  Yeah, it's not good for the mental health either.

• 12:19Speaker 02

  No, for sure.

• 12:21Speaker 01

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• 14:42Speaker 01

  So let's move on to step two, which is quitting the business versus quitting a version of the business.

• 14:48Speaker 02

  Right.

• 14:49Speaker 01

  I wanna share a distinction that has really saved a lot of our businesses. But most businesses I interact with, like, I often feel like this distinction is not something that they really focus on. And that is, you need sometimes to quit a version of your business, a type of manifestation of this business or a type of the way you're delivering this business, and say, hey, this is not a failure by quitting it. It's me understanding that this is not working. Your job as an entrepreneur is to serve the customer. And if you're not serving the customer, you need to stop doing that. Right? Like, stop doing things that people don't want. I need to pivot. And that's just an improvement. You're just improving your business in that way. And it's almost worth mentioning this, like, in its own section here because you could save your business by just not being stubborn,

• 15:34Speaker 01

  by just pivoting a little bit and realizing that, hey, it's okay for me to, like, let go of this idea and create a different version of this idea. And in tech, we call this killing our darlings.

• 15:45Speaker 02

  And I don't know if this is an Australian expression, not throwing the baby out with the bathwater.

• 15:49Speaker 01

  That's a good one, but what I love about the tech killing our darlings thing is that, like, you're gonna create things that you love. Like, when we had Webinar Ninja with our software company, we created a bunch of features that we absolutely thought were amazing. But at some point, we started to look at the data and look if users are actually using these features. Are we actually making any headway? Is it valuable for our customer? If not, we need to remove these features because it's bloating the software. It's causing more problems because the more features you have, the more problems you can have, more bugs, the more complicated the software becomes for the user. So sometimes you've just gotta, like, say, hey, this is not serving my customer anymore. Regardless of how brilliant I think it is, I need to just cut it out.

• 16:28Speaker 02

  Right. It's getting very analytical and very specific about what elements of the business aren't working. So it's not the whole business is failing.

• 16:35Speaker 01

  Right.

• 16:36Speaker 02

  Really getting granular, what is not working that we need to fix.

• 16:40Speaker 01

  Yeah, and I would say that it's good to use a bit of sports mentality here. A lot of people know I play basketball, but like, sometimes you just have to put your ego aside. It doesn't really matter, like, what the product does. Doesn't matter how you deliver, as long as your customer is happy and is willing to pay. So it doesn't matter how you get to the win in basketball. Sometimes it's like, I realize, oh, they're double teaming me. I should not be shooting the ball. I need to pass the ball because somebody's open if I'm double teamed. So like, in this instance, like, I'm usually valuable by scoring, but right now, I'm not supposed to score. I need to pass more. So like, you have to adjust and just make sure that you put your customer first.

• 17:17Speaker 02

  That makes sense to me. I don't know about the double teaming bit, but I'm sure maybe there'll be some basketball fans that understand that analogy.

• 17:24Speaker 01

  Exactly. A rule in basketball is like, if you're double teamed, that means somebody's open. That means that that person's not guarding the other person, you know? The second person that's guarding you. Anyway, we did this ourself with our podcast. Our first podcast was not this podcast. We had a podcast called People Who Know Their [BLEEP]. It was our first podcast. We did interviews with other entrepreneurs. And we had to kill that show, kill that darling, even though we put so much time and effort into it. And six months and 40-something episodes and hustled to get, like, people like Gary Vee on our show. We had to say, this is not working, you know? And we realized, okay, we're not the best when it comes to interviews. We're not really differentiating ourselves. We used our strengths as teachers and said, let's teach on this podcast.

• 18:07Speaker 01

  And that's why the $100 MBA is primarily lesson-based, adding value in some way through answering questions like this. So sometimes, you know, your biggest failures, your biggest, you know, mistakes actually teach you of what not to do so that you can create a better product.

• 18:22Speaker 02

  And I think what I was trying to say before with the baby in the bathwater and what you, I think what you said in the beginning of a different version. It's, we still stayed in the podcasting space. We still kept with, you know, we believed in the idea of podcasting. It was that particular podcast that wasn't working. And we got, like you said, all those things you mentioned, we weren't leveraging our strengths. All the things that, you know, we've talked about that you've mentioned here and there's other episodes that we can refer to that go into detail. Those were the things that weren't working when it came to that podcast. It wasn't that podcasting doesn't work. It's not that you're, we can't podcast.

• 18:57Speaker 01

  Our implementation, yeah. Our implementation of this concept was not working. And we had to really see that distinction. And, you know, it reminds me of one of my favorite books, The Hard Thing About Hard Things, Ben Horowitz. He talks about, you know, sometimes you gotta create a bad product to create a good one.

• 19:12Speaker 02

  Right.

• 19:12Speaker 01

  You know, you have to realize, oh, this is not what people want. I need to create something different. And again, it's, you have to be humble enough to realize that you failed. It's okay. Failure is not the end of the world. You could just bounce back and learn from that failure and go ahead and create something better.

• 19:27Speaker 02

  And we looked at those numbers. We saw the downward trend. The trend was the downloads weren't, you know, going up every, every episode that we released. So that was just a very clear indicator that that wasn't working.

• 19:39Speaker 01

  Yeah.

• 19:39Speaker 02

  In particular, when it came to.

• 19:40Speaker 01

  I also wanna point out that this is an exercise you're gonna continue to do even when your business is successful, right? You're gonna continue to reinvent yourself and improve your business, improve your program. Like, for example, the $100 MBA program, we've launched it in 2013 and we continue to improve it till this day. You know, we realize, oh, that's not working anymore. We need to add more templates. We need to add more, you know, examples. We need to maybe create content that doesn't age that quickly. We also, you know, implemented AI features in there so that people can be able to implement the stuff that we teach in the program. Like, big companies do this all the time. They, they create products that cannibalize their current product lines. Apple does this all the time, you know? Before the iPhone, there was the iPod and the iPod Video,

• 20:23Speaker 01

  which basically was like a very, very basic version of an iPhone and did like one-third of what the iPhone does. But the point is, is that they realized, we need to do this before our competition does this. We need to reinvent ourselves and we need to kind of make sure that we're constantly killing our darlings and realize that, hey, this is not, this is good and people are happy with it, but not gonna be happy with it forever.

• 20:44Speaker 02

  It was clear to us when the podcast wasn't working. How does Michael know to kill the business completely? Or kill that version pivot? Do something different in that business, but still stay in that, in the business that he's in?

• 20:57Speaker 01

  A good way to answer that question that Mike has is, or Michael to have is, is ask the question, is the problem I have right now, is it a market problem? Is the market the problem? Or is it the offer I'm presenting? If nobody wants this solved, like there's no real problem here to be, to be had. And the market doesn't want this anymore, right? That's a market problem, right? There's no really problem to solve here, right? That might be the real ending of your business, right? But sometimes you're trying to sell a product or service or solution to the wrong market. And they don't really appreciate what you're offering. They don't really understand what you're offering. One of the things I always say is that like, when you're making any kind of offer or solving any problem,

• 21:39Speaker 01

  you have to sell it to people that actually recognize they have that problem. Maybe if you are selling, you know, let's say healthy recipes. So you can cook healthy dinners and you're selling to people that are not really health conscious. Right. They're like, that sounds good and all, I know I should be doing that, but you know what? I'm, I'm busy. I'm just going to pick up Chipotle, right? That's just the reality. You're selling it to the wrong market. But if you sell to people that are like fitness fanatics, people that really care about their health, people that are biohacking, they're going to be like, yeah, I need to know how to do that. And that is the right market for that.

• 22:08Speaker 02

  That makes sense.

• 22:10Speaker 01

  And then it could be your offer. And these are the two things you need to look at. Sometimes we try to sell something and it doesn't really solve the whole problem, right? It solves a portion of the problem, but they're like, hey, I still have to do XYZ. You know, if you go back to the healthy food type of thing, like I need to cook healthy meals. Can you give me some recipes? Maybe that's not enough. Maybe your offer needs to include also a shopping list. So they know what to buy when they go to the grocery store. Maybe they need to be specific for your local area of like, maybe you can just do like an Uber Eats cart and then share that cart with them like, here, order this every week. Make it super simple. So like your offer really needs to solve the whole problem so that they're, they don't kind of feel like, oh, I still need to help, or this is actually worth paying you money for.

• 22:51Speaker 02

  Can you give me another example? Cause I think there's more to unpack there.

• 22:55Speaker 01

  Okay, great. As you know, we have run events, many events here in our company. One event that we ran several times is called Oskan, which is a retreat for entrepreneurs. And we go on these skiing trips. Last time we went to Queenstown and we spent five days in the snow and it was all inclusive and great restaurants and, and great crowd of entrepreneurs, right? If I try to sell Oskan, like it was so easy to sell this event, by the way, but it was so easy for a reason. Cause I was selling it to the right audience, to the right market. If I sold this event, which was about $8,000 a ticket to people that are just starting out in business, it would be very hard because they may not see the value. They may not, maybe they can't afford it. Maybe they can't take the time off because they're still in their job to go on the middle of the week.

• 23:40Speaker 01

  You know, so what we did was that, hey, who would actually benefit the most? Well, actually busy entrepreneurs, they don't have time to network. People are actually doing well in their business. People that, you know, the cost is not the biggest concern. Maybe their biggest concern is like, who else is going? You know, I want to make sure it's a good use of my time. So as long as I can address that, I can pitch it to the right audience. That's the right market for me, you know, established entrepreneurs. Then I gotta make sure that when I'm offering it, it's worth $8,000. Like I'm actually solving all those things. Like I am going to meet interesting people. There are going to be structured discussions. It will be fun, you know, it's going to be novel. It's going to be, you know, a good use of my five or six days. So we could have failed with this event and we tried to pitch it to the wrong people.

• 24:21Speaker 02

  Yeah, I think that's a really good example. That, that makes it a lot clearer because retreats work. Business owners go on retreats. Founders want to network with the right people. But the combination of the group and the willingness to pay, you know, for more of a high end version of a retreat, the extended time, all of those things that, you know, factor into the cost. That combination means that it has to be the right founder, the right market, as you've been saying.

• 24:50Speaker 01

  Yep.

• 24:50Speaker 02

  Right audience in that market.

• 24:53Speaker 01

  A market is just a group of people.

• 24:54Speaker 02

  Right.

• 24:54Speaker 01

  Yeah. Hey, I hope this episode is really helping you think clearly through some of this hard decisions. I encourage you to subscribe to the show on whatever platform you're on, Apple, Spotify, YouTube, particularly because we have an upcoming episode, Q and A episode with Nicole and I, that I want you to make sure that you don't miss. Okay. I want to make sure that you tune in and it's about if you feel stuck, if you feel lost. Somebody writes in and says, I feel stuck, I feel lost. I don't know how to change things in my life, you know, they just feel like they're in a rut. And we've all been there sometime and the longer you're there, it's harder to get out. So tune in, make sure you subscribe so you don't miss that episode. Because I'm really going to try my best to help out this listener, but also help out everyone who's listening, who's just feeling stuck right now. Subscribe so you don't miss it.

• 25:38Speaker 01

  All right. Step three, if you decide to stay in the business, you realize, oh, there is potential. I just need to learn a little bit more. This is step three. You need to start talking to people. Okay. A lot of people, I cannot tell you how many times I hear about this where people get stuck in their business. They feel like they're in a pivotal moment and they think the answers come from them. No, you need to talk to your customers. You need to talk to your audience members, potential customers. Okay. You need to decide that I'm going to keep going, but I need data. I need information. Right now you're dealing with very little information for you to be able to make any kind of decisions to change your trajectory, right? So you need to speak to your customers, any customers, if you've had any customers, you've made any sales.

• 26:21Speaker 01

  So like conversation number one would be people who have bought from you, especially your best customers. You want to ask them, why did you buy? Right. Why did you buy my product or service? What problem did it solve for you? Right. You want to learn, a lot of people, they just think, look, the customers that bought, they're like, oh, they bought. I want to leave them alone. No, they're a goldmine information. There's two things that come out of these conversations. Number one, you get the exact language they use. They put that, the way that they feel about your product or service in certain words. And you can take those words and put it straight into your marketing material, on your website, on your sales page, on your ads, in your social media. And it's going to resonate with your potential audience members because you're speaking their language. And the second thing you're going to, you're going to understand why your thing works for those people.

• 27:04Speaker 01

  And you're going to understand who they are because then it's like, oh, I gotta find more people like this. And I need to pitch them my product because they get it. All right. These people that buy.

• 27:12Speaker 02

  This was game changing for us in Webinar Ninja. I remember this, where as soon as we started running user interviews and having those conversations with customers, it changed so much of our marketing and informed the marketing, informed the sales process. It informed the features that we developed and built and the things that we killed, the darlings that we killed in the, in the software. And it was even, I loved doing those interviews. It's an enjoyable part of what I was doing in, in the business. And I think a lot of people overlook this. I gotta give a shout out to Michelle.

• 27:44Speaker 01

  Yes.

• 27:44Speaker 02

  It's not.

• 27:44Speaker 01

  Michelle Hansen.

• 27:45Speaker 02

  Michelle Hansen, Michelle Hansen has written a book on this called Deploy Empathy. It's.

• 27:51Speaker 01

  The playbook.

• 27:51Speaker 02

  It's the playbook.

• 27:53Speaker 01

  For customer conversations.

• 27:54Speaker 02

  For those conversations, it gives you scripts. This was not.

• 27:58Speaker 01

  She's not sponsoring this. But we've used her book several times and you know.

• 28:02Speaker 02

  I use those scripts for those conversations and, and it helped so much to understand exactly what you said. Like who those customers are, if you have those conversations where you're doing most of the listening versus, you know, the talking.

• 28:17Speaker 01

  Yeah. You have a problem if you can't say five people that have bought from you, a customer. Like you can't say their names, like then you don't really know your customers. You need to spend more time speaking to them, especially when you're trying to make decisions. So conversation number one are people that have bought from you. What about conversation number two? Conversation number two are people that didn't buy from you. Another goldmine. This is a little bit harder because for some reason, we just don't want to bother people that didn't buy from us. And feel like, oh, we broke up, so we don't want to talk, right? But it's also super valuable, right? You can literally email them. You could just talk for them two minutes. You could just like, just have a quick exchange. You can make it fun and interesting where you email them and say, hey, I'm giving you 24 hours license to be as honest as possible.

• 29:00Speaker 01

  Let me know why you didn't buy, you know, or, or why you canceled your subscription. You're not going to hurt my feelings, but only for 24 hours. And you could just have a little bit of fun with it. I remember when we were trying to reduce our churn at Webinar Ninja, reduce the number of people who are leaving our service. One of the things that we implemented immediately was a cancellation survey. So when they would cancel in the app, we would ask them why they canceled. And we would have, we made it simple. So they, like the top reasons, you know, is it too expensive? Did I have, not have all the features you wanted? Maybe there was a technical issue, whatever it is. And then they could have a, there's a blank space for them to put that information in. But at any point, we could email these people and ask them questions like, hey, what would you need to have? What would need to be true for you to come back and, and be our customer?

• 29:41Speaker 01

  And this tells you exactly what's broken in your offer, what's broken in your business so that you can offer it to those people. But I do want to say something like, you need to learn from who's speaking to you. Understand the customer, what they do, their demographic, their needs, their wants, and compare that profile to the people that buy, right? If they're the wrong customer, then good to have the feedback, but take it with a grain of salt. Because you really don't need to change the business or change the product for somebody that's not intended to be your customer. So if they fit the profile of people that have bought, then oh, maybe there's some things you need to improve and some things that you can pivot with.

• 30:16Speaker 02

  Well, I was going to say, is the difference, there's three different conversations there, right? There's the people who buy, there's the people who've bought and have canceled. And then there's the people that haven't even interacted with your product or service and haven't bought.

• 30:28Speaker 01

  Yeah, I kind of put them in the same bucket. You know, they're, they're not satisfied in some way. Something is not fulfilling their needs. You know, obviously like, there's a difference between somebody subscribing to your service for one month and canceling versus somebody who subscribed for like 18 months and then canceled, you know? But I'm talking about the ones that, you know, don't stick around for too long.

• 30:47Speaker 02

  The reason I think that third bucket is a different bucket is because that third person who hasn't even interacted, who decides not to buy, tells you about who's not your customer.

• 30:56Speaker 01

  I think it tells you more about your sales and your marketing strategy. You know, like, maybe they don't understand the value. Maybe they don't understand what they're buying. Maybe there's not information. Maybe they didn't have a chance to ask questions. A whole bunch of stuff, like, you have no idea why they didn't buy. But when someone has bought and then they canceled, now you know for sure they don't want it.

• 31:12Speaker 02

  Right, that's a good distinction. And it's going way back with the Webinar Ninja days and those user interviews, but going back to-

• 31:18Speaker 01

  We're obsessed about this.

• 31:19Speaker 02

  We did, and going back to that book, there's just so many different examples of different conversations for different customers and the different pain, like, the different moments in the buying journey and post-buying journey and all that.

• 31:31Speaker 01

  But this is all to say that you need to talk to your audience, your people, whether they're customers, they're not your customers anymore, or they never bought. Like, this is just no way around this. You have to do this. And this is why it's so important to choose a business that you enjoy and because you're going to be hanging around the people that are going to be your customers, you're going to talk to them. You want to make sure you're spending a reasonable, good time with them. And one of the things that really surprised me when we did these interviews is like how gracious people were that the founders actually reached out and wanted to have a conversation. Some people, like, even the people that didn't buy, people that are not, that canceled, they're happy to hop on a call. And a lot of people just like to have a conversation and talk.

• 32:07Speaker 02

  And to be clear, five conversations is plenty. If someone's imagining, oh, my gosh, how many, I don't have time to run customer interviews. I can't interview 15, 25.

• 32:16Speaker 01

  Five a quarter is fine.

• 32:17Speaker 02

  Five is for that first, exactly. Five a quarter is plenty. You get so much, like you said, gold from each, each conversation.

• 32:25Speaker 03

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• 33:11Speaker 04

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• 33:26Speaker 02

  Probably about halfway. What about the other side of it? When is it the right time to actually quit?

• 33:33Speaker 01

  And this leads me to, you know, I would say step four, which is permission to walk away. This is your life. And I have a rule in business. A business should serve you. It's a means to an end, okay? You should not be serving the business. You're not a slave to the business. You're creating this business so that it can fund a better life for you, whether it's the actual business itself. You're enjoying doing what you do every day. And, you know, the revenue and the money that makes for you, the profits, serve your life. So, don't get it twisted. You know, the whole point of doing all this work is so that it serves you. Your business needs to prove something, not only to your audience and to your customers, but to yourself. Like, is this worth it for me?

• 34:14Speaker 01

  You know, back to what Ramit was saying, you know, in, in the interviews, like, what am I getting in exchange for all the sacrifice?

• 34:19Speaker 02

  Yeah, people forget that piece, like, I have to be enjoying the process.

• 34:22Speaker 01

  Yeah, so i- if you're getting nothing back and it's damaging your life, it's ruining your social life, financially, physically, mentally, you know, you're not getting anything in, in exchange for this business, then you need to consider, like, dropping it. You could try a different business. You could try a different venture. You could take a break if entrepreneurship is not your thing. The important thing you need to remember here is that a business will always challenge you in some way, but stress isn't a signal. You should feel like, okay, I'm, I'm going through a challenge. Am I happy to persevere and go through that challenge and see the other side? Am I going to be proud of myself when it's all over? Or am I going to just like, ugh, that was just horrible from start to finish?

• 35:02Speaker 02

  It's kind of that difference between the stubbornness and the persistence, where I'm just literally persisting for, for the sake of it versus, am I learning and growing each time I'm going through these challenges? Or as I'm experiencing these challenges, I'm actually getting something from it? Not just another day, I'm going to keep going, I'm going to go at it again.

• 35:23Speaker 01

  Willpower's not, you know-

• 35:24Speaker 02

  Yeah, it's more like-

• 35:25Speaker 01

  Unlimited, yeah.

• 35:26Speaker 02

  I'm actually learning and growing and, and every setback has taught me something that pushes me in the right, keeps me moving forward versus literally just, I'm just going to keep going, no matter what.

• 35:38Speaker 01

  Yeah, I don't think that's sustainable. Like I said, like, you know, willpower's not unlimited. You're not going to be able to continue to do it if you're not enjoying some aspects of it. Some people just love the challenge of business. They love the game of business. They don't care if they fail, if they lose. They just like being in the arena and being a part of it. You know, I play, pick a basketball on Sundays with some of my friends and some people are really good and some people are horrible. I admire this basketball player more than anybody because they are not good, but they show up every single week because they enjoy it. They like it. They, they don't really care about winning or hitting all the buckets and, and scoring and, and being, you know, a valuable team member, like, or in terms of like valuable, in terms of like scoring. But they just enjoy the, the run. They enjoy the camaraderie.

• 36:20Speaker 01

  They, they're getting value out of it regardless of the success of it.

• 36:24Speaker 02

  It's their own success metric at that point.

• 36:28Speaker 01

  We talked about this many times, but, you know, I had a clothing line called Zenon Designs. It was my clothing line. It was a custom tailored clothing line for tall men. It was a profitable business, quite successful business, quite overwhelmingly successful, but I didn't enjoy it. I was frustrated. I was burnt out. I didn't enjoy the day to day. I kind of cringed at the thought of like, okay, this weekend I have to like, find the tailor and talk to him about these new designs. And then after that, I got to go to the warehouse and like, make sure that the, you know, all that stuff is packed properly. Then I got to talk to like my warehouse manager to make sure that, you know, arrives on time for these orders. All these things I didn't enjoy. I like, I just, it was like a burden, but I was like caught up in the business. I already started it and I had customers and people relying on me and people, this inventory's already been sold, so I got to fulfill it. It was just like an obligation.

• 37:12Speaker 01

  I just basically just shut it down because I was just so frustrated. It was like, I don't want to do this anymore. Stop, no more, please. And, you know, it was actually such a relief for me to do that. You know, one of my biggest regrets is like, I should have sold it. Like, why didn't I sell that business? But I, I was so burnt out, it didn't even cross my mind. I was just like, I just can't take another day of this. So, keep this in mind. This is a reality. Sometimes we get caught up in things and we can probably see this in our personal life. Maybe it's relationships, maybe it's a routine, maybe it's where we live, where we just do things over and over on autopilot just because we feel we have to. You don't have to do anything. You could choose what to do and you're going to have to just obviously deal with the consequences of that choice, but sometimes those consequences are not that bad.

• 37:53Speaker 02

  Right, so it's okay to walk away. It's okay to give yourself that permission. And now in hindsight, you would have sold, you walked away, you would have sold it had you not pushed yourself to the point where you got so burnt out.

• 38:04Speaker 01

  Yeah, 100%.

• 38:05Speaker 02

  So having a little bit of like, it's okay if I need to walk away. Maybe my exit will be a bit more strategic.

• 38:11Speaker 01

  Yeah, I would get something out of it, yeah. Step five is what I mentioned at the top of the episode, is asking yourself this question. Michael, if you're listening, if you're watching, anybody else who's in this situation, ask yourself the question, if I can get all my time back, all my money back, every hour, every dollar, if it was returned to you, would you continue this business even though all that sunk cost is actually back in your pocket, back in your time bank of your life, right? Would you choose to continue the business? If that's the case, then you know that this business is worth pursuing because you're not making a decision based on that sunk cost fallacy of thinking like, oh, I invested all this time and money and energy, this has to work. You know, like, what if you had it all back? Would you do? Probably not.

• 38:54Speaker 01

  So like, one of the things that I learned through playing poker, I play poker for fun. It's one of my favorite things to do, is that you're going to lose sometimes and you're going to, you know, make some bets and you're going to not win the pot. Somebody else is going to win it. Am I going to go on tilt, which means get angry, get stubborn in poker? And be like, you know what, I'm going to go even harder next time. Like, why am I, no. If I have a bad hand, I fold, right? You have to just like next mentality, next play mentality of this idea of like, hey, I don't have to continue if this is not serving me, right? I don't have to continue if this is not, you know, put in more money and more time and more effort. I often think about when we were in our teaching careers and we would always feel like, oh, we're too old, we're too late, you know, we're already in our 30s.

• 39:38Speaker 01

  Do we quit our jobs and start this whole like entrepreneurial career again? And the thing is, is that like, I could stop now, stop my career and go full time and I cannot waste any more time. The more umming and ahhing I'm doing, I'm wasting more time, more hours, more days.

• 39:53Speaker 02

  And look, this is, I mean, the fact that Michael has again asked the question and is taking stock is-

• 40:00Speaker 01

  Yeah.

• 40:00Speaker 02

  It takes a lot to get to that point and to be self-reflective enough to say, okay, this might be the line in the sand, but I'm taking this moment now to decide. Do I keep going or?

• 40:11Speaker 01

  If I was talking to a friend, one of the things I say a lot and that you always kind of smile when I say this, is when there's doubt, there's no doubt. You know, sometimes we just, it takes us a while to admit it to ourselves that like, this is not working. I need to change something. I need to do something different. I need to like, when, when that doubt is there day after day, you have to trust your intuition sometimes, but you got to trust but verify. Like I said, look at the numbers. The numbers don't lie. And often we don't want to look at the numbers because you feel like the numbers are going to confirm something that makes you feel not so great. But it's better for you to just like feel that and then move on and then not waste any more time and effort or not wasting more time and effort doing the wrong thing, changing your, your direction, pivoting and having a better business on your hand.

• 40:53Speaker 02

  And I think that's the part of his question where he's asking, am I just being persistent or am I being stupid?

• 40:59Speaker 01

  Yeah, I would replace the word stupid with maybe being blind. Like, sometimes we just don't want to see the answer, hoping that something will get better. But, you know, sometimes the facts, the data, the information, everything we covered today are going to tell a different story. You might realize, actually, it's not doing as bad as I think it is.

• 41:17Speaker 02

  Right.

• 41:17Speaker 01

  Maybe I just need to make a few small changes, you know, go into a new market, get some more of the customers that are doing, that like my product and service, my best customers, find more of those people and I'll be fine. Sometimes the problem seems bigger in our head or in our gut than it actually is, but you're never going to know unless you actually go through these steps that I mentioned. So, just to wrap up today's episode, here are the things that you need to remember. You got to look for trends, right? A month down, two months down, not such a big deal. Three months or more, start paying attention. Six months, red alert, okay? You need to make sure that your business is moving in the right direction consistently, especially in the early days. You know, you want to make sure that your first year is a year where things are moving on the up and up and you're getting some traction. Before you kill the business, ask whether it's a market problem

• 42:01Speaker 01

  or if it's an actual offer problem. When I'm giving my customers, right? Most failures are usually I'm just implementing the offer wrong or maybe I'm talking to the wrong people.

• 42:10Speaker 02

  Packaged wrong.

• 42:11Speaker 01

  Yeah. If you do decide to stay in the business, do yourself a favor and talk to as many customers as possible. You know, you said five conversations. If you've never done any conversations, you might want to do a bit more than that. You know, maybe 10 conversations, but like on an ongoing basis, five out of quarter is fine. But have conversations with people that have bought from you, people that did not buy from you or canceled. Learn, have no ego about this. Sometimes they're going to say some things you're not going to like, but that's okay. One of the things that you could do with AI is like, you know, have it transcribed or have it summarized. We use something like called granola that helps you with that to just make it just feel a little bit more objective. You know, again, you have the permission to walk away from the business.

• 42:53Speaker 01

  If it's damaging your life, if it's hurting your mental health, it's hurting your physical health. If you feel like it's not giving you anything back and you've really given it a red hot go and you've tried different things and you've experimented and it's still not working, that's okay. You can close shop and start something new and stop dumping money into a leaky bucket. And then lastly, ask yourself the question, like I said, about the sunk cost. Like, hey, if I can get all my money back, my time back, would I continue this business? Do I still have that passion and that love and that need to see it through? Is there any way that the market could absorb what I'm offering? If I change my offer, if I pitch it to the right market? If that's the case, awesome. If not, that's okay. It's okay for you to say, hey, this is not serving me anymore. Time to change.

• 43:33Speaker 02

  Great final thoughts, Omar. I hope we've given Michael a lot of food for thought there and helped him decide either way, or at least helped him work through this question, this decision. If you'd like Omar to answer your question here on Q and A Wednesdays, just go to 100mba.net/queue, submit your question and we'd love to tackle it here on Q and A Wednesdays.

• 43:55Speaker 01

  A hundred percent. And just one last thing before we wrap up today's episode. One of the things I always say is that business is one of the best personal development programs ever. One of the things that you probably have noticed about today's episode and the struggle that Michael's going through and anybody else in this position is that like you have to have a lot of self-awareness. You also have to regulate your emotions. You can't just let the way you feel dictate all your decisions. You have to verify these feelings. You have to see what's going on. You have to be objective in some way. And this is actually really good for you in your personal life where you start to question like, am I really bad at XYZ? Am I really an unhealthy person? Or am I trying in certain ways? You question the thoughts in your head, you know, just always just go with whatever

• 44:37Speaker 01

  your gut is telling you, which is very helpful in life as well, like I mentioned. If you want to continue your path into growing your business, we have a recent episode that you should check out. It's called what to do when business is slow. Sometimes you're just in a slow period where maybe it's a slump, maybe it's outside your high season, maybe it's not the holidays or, and you want to be able to pick business up a little bit. You want to make a few extra sales. Maybe you want to know how to like do a sale to your email list or whatever it might be. Check out that episode. It's going to help you a lot. Thank you so much for being here with us on Q and A Wednesday. We're here to help you along your journey. So make sure you ask those questions like Nicole said, to submit your questions so that we can answer them. You're not only helping yourself, but you're helping other people that have similar challenges

• 45:22Speaker 01

  in their business. Thanks Nicole for being here.

• 45:24Speaker 02

  Thanks Omar. See you next week.

• 45:26Speaker 01

  Take care.

• 45:28Speaker 01

  If you found today's episode helpful and you want more practical business lessons to help you start, grow and scale your business, the best thing you could do is subscribe to this podcast. Hit subscribe or follow on your favorite podcast app, the one that you're using right now, whether it's Apple or Spotify or wherever you listen to podcasts. By hitting subscribe, you get our next episode automatically and it's the best way to support the show. It's absolutely free and it's a way for you to commit to growing your business. And now that you've subscribed, I'll check you in the next episode.