Latest / The Life-First Solopreneur / 58. How To Know If It's Time to Quit or Keep Going As A Solopreneur
Transcript
- Joe Rando (00:00): If you're trying to do something and the wave is against you, you could be brilliant and still fail. If you are going with the wave, if it's going in your direction, then you can screw up and make mistakes and they'll be forgiven because you're just being propelled forward by the forces of the economic system at the time, Intro (00:18): Bigger, doesn't always mean better. Welcome to the One-Person Business podcast, where people who are flying solo in business come for specific tips and advice to find success. As a company of one, here are your hosts, Joe Rando and Carly Ries. Carly Ries (00:37): Welcome to the One-Person Business podcast. I'm one of your hosts, Carly Ries, Joe Rando (00:41): I'm Joe Rando. Today we're gonna continue the process of deep diving into various topics around the solopreneur success cycle. We're gonna do this with many aspects in many phases, and the goal is to help you go from start to finish. From deciding to create a One-Person Business to growing it, or perhaps selling it or today, maybe closing it, shutting it down. As a reminder, the solopreneur success cycle consists of three phases: Building a One-Person Business, Getting started doing, and Adjusting Each step has multiple topics as well. You can see this stuff all in the podcast page on our website at lifestarr.com/podcast where we've got filters and tags so you can see any aspect that you want to. It might sound a little complicated, but it's not nearly as bad as going into a business and making lots of mistakes you could have avoided. That's really ugly. Today, we're gonna take on a tough question, which is when things aren't going the way you want in your business, do you keep trying, or do you quit? And the issue is that the answer to this is really complex and may be different for every person in business. Carly Ries (01:49): When people get started, they usually have a picture of how it's going to go, but it never actually goes that way. This can make people feel like it's going badly, but that's not always the case. Joe Rando (02:00): That is so absolutely true and that's why I'm going to tell some of the stories from my own life of success and failure. So this is gonna get a little personal today. A little different from most of our podcasts, but yeah, you're gonna get the Joe Rando story. I think it will help illustrate some things that you're talking in just general 50,000 foot concepts wouldn't illustrate. So the first thing you need to do when you're struggling with this decision of whether to keep the business going or not is to step back and look at the entire situation objectively. That can be really, really hard. Because you're so close emotionally to the problems and the situation and so invested. I just wanna point out that the internet bombards us with these stories of people who've set up a shop and almost overnight become massive successes. Joe Rando (02:51): I'm sure it happens. But most of these stories are BS and anyone who's been successful in business will tell you that it's almost always a lot harder than you expect it to be. So start with that. If you do still feel the need to kind of review whether you should keep going or not, you want someone far away from your day to day problems. Particularly someone that's been through this before, to help you step back and look at the situation as it really is. If you're struggling, really try to find someone that can help you with this. Carly Ries (03:22): And if you don't have anyone like that in your life, because it can be hard to find somebody that's more objective than has a personal tie to it. Join the LifeStarr community, community.lifestarr.com. There are lots of other, solopreneurs and experts that will happily help you out and hold you accountable. And it doesn't cost a thing. Joe Rando (03:39): There are usually four options with respect to moving forward or not. Okay. It's not just keep going or not. There's really four. Let me walk through them. The first one is you can stick with it. You can keep going, keep doing what you're doing. The second one is, shut it down. These are the obvious ones. Third one is you can hibernate. And I'll talk more about that later. Basically the idea is to not completely shut it down, not kill it, but put it to sleep for a while, if there's a reason to do that. And the last one is obviously adjusting. Doing something different and moving forward. As we go into this process, you're gonna need to make a list of all the things that are going right and going wrong. I'm going to go through the topics that I like to look at. Joe Rando (04:23): There's probably others. Maybe some that you need to use for your particular business situation or personality, but these are good starting points. The first question I like is, "Do people like your product or service?" that can tell a lot. Are people buying it? How's that going? The next one is, "Do you have lots of customers? Not enough customers, no customers." Those are very telling factors. Next, "Are you making money? Are you losing money?" Beyond that, with respect to money, "Do you have enough working capital or are you out of money?" An important factor here is "Are you still enjoying or did you ever enjoy, what you're doing? Or is your passion gone? " Carly Ries (05:01): Let me elaborate on that. As a One-Person Business owner that should be at the forefront of your mind because you are only answering to yourself. You don't have to work a nine to five and do somebody else's passion. This is yours. So don't take that lightly. Joe Rando (05:14): Definitely. It's kind of the main reason that people should be doing this you're right. Absolutely. How's your lifestyle going with this business?, Are you working too much or stressed out all the time? Did you start this to have more time with your family and you never see them anymore? That's really important. These are the things that you did this for. One that people don't really think about much, and it's something that I've found to be extremely important, is the wave. I call it the wave. Is it in your favor or not? The wave is whatever it is that's driving certain things forward and driving other things backwards. Let me explain. Right now one of the waves is crypto. Anybody that sets up a business and has crypto in their name gets money thrown at them by investors, maybe it's easy to get customers. Personally, if you want email me and I'll tell you my personal opinion about crypto in the long run, but I'm not gonna put that out on the podcast. But these waves come and go. Beanie Babies were a wave back in the nineties. The internet itself was a wave back in the late nineties. Carly Ries (06:22): I'm still waiting on my beanie babies millions. Joe Rando (06:23): We have to talk Carly. . But the reality is that if the wave is against you, then. I think Warren Buffet said it really well. "When great management meets a bad business, it's usually the business' reputation that remains intact." What that means is, if you're going against the wave, if you're trying to do something and the wave is against you, you could be brilliant and still fail. If you are going with the wave, if it's going in your direction, then you can screw up and make mistakes and they'll be forgiven because you're just being propelled forward by the forces of the economic system at the time. That's just something to really think about. I'm gonna get into specifics on all this. Joe Rando (07:08): This is going to be a relatively long podcast, just so you know. Another thing that people think about a lot, but maybe not correctly is the concept of sunk costs. You know, I've spent so much already in this, I've invested so much money, I can't quit. The reality is, that shouldn't affect your decision either way. The money's gone. Okay. It may have bought something, it may be that it's all wasted. But the question really is, is the money you're going to spend to keep at this, a good investment. That's the question that you should be asking yourself. Does that make sense Carly? This idea of not factoring in the money you've blown, so to speak? Carly Ries (07:47): Yeah, absolutely. I'm tracking. Joe Rando (07:49): Cool. So now I'm gonna get personal and walk through some of the things in my own life. The first one, I want to look at an example of my life of sticking with it, of not quitting, staying at it even when things got tough. Way back when I was 30 years old, I decided that I was gonna become a solopreneur developer of power centers. Power centers are those big box shopping centers that first became a thing in the very late 1980s when stores like Home Depot, Target , Circuit City, and Linens n Things came along. The thing was, that right then when I started this, the economy was in the tank. There were no lenders for these projects and retailers were barely expanding. Lots of people told me not to do it, but the dire economic mood was something I could use to my advantage. Joe Rando (08:36): I found a piece of land and I analyzed it using some technology I had built in grad school. I'll talk more about that later. It had great promise as a power center, but it wasn't obvious to the casual observer. The owner of a land was a man named John Cardelli and he wanted to sell it for a lot of money, more than it was actually worth at the time, particularly in that down economy. He was a wonderful and smart guy and he understood where things were at. As an Italian immigrant, English was a second language to him and his daughter, Anna helped him out. It turns out she was as savvy as he was. So what I did is I offered to give them their price if they would give the time and flexibility to make it worth that much. So I needed to be able to do what it needed to be done, to make the land worth the amount of money he wanted for it. Joe Rando (09:18): They agreed nd I was able to work on permitting and leasing this property for an affordable option payment. The economy recovered. as it always does, and I wrapped up all the permits for a power center. I got nothing except a nibble from Kmart in 1993 that crashed and burned along with all their other expansion plans that year, as they lost a billion dollars. Then years passed with nothing. The market's not on our radar yet was all I heard from the retailers. And it was so frustrating. Honestly, I was embarrassed. I used to actually drive around that city because I didn't want anyone to see me. I was paying money every month to the landowner. To his credit, he believed in me and he didn't increase it according to our original plan, but I had to start asking, should I give up the ship? This was really a tough time for me. I was so invested in this financially and emotionally, but I wasn't sure what to do with no progress for literally years. Carly Ries (10:13): Joe, just to shed light on your personal life as you were going through this, you had your family at this point, right? Joe Rando (10:20): Yeah. I had little kids, my wife and little kids. At this point, by 1993, when that Kmart deal crashed and burned, my third daughter had been bornin 92. I was doing okay. I mean I was paying the mortgage and stuff, but it just was not a fantastic situation. Basically, I wanna kind of go through and assess it. And I wanna be honest, I didn't necessarily do this exact exercise at the time, but this is kind of the thinking that went into it over time. So, the question was, "was I making money?" No, I was spending money. I wasn't making any money, but thanks to the flexibility of John Cardelli, it was manageable. Joe Rando (11:07): Did I enjoy it? No. I didn't enjoy it per se because I had no control over what the retailers were gonna do. So I was not happy. I think I forgot. Did people like my product or service goes back to the fact nobody was biting. So they obviously didn't. In terms of lifestyle, it wasn't costing me a ton of time to manage this because nothing was happening. I had a broker who worked with retailers all the time and he had to alert me if anything shook loose. So I was really pursuing some other things that interested me. Lifestyle wise, this was pretty good. I wasn't having a bad time with my lifestyle. Then there is the question of the wave? The wave was really the crux of this decision. The big box retailers were expanding rapidly in what they called the A and the B markets, the best markets and the second best markets. But soon there would be nothing left, but the C markets. And that was me. One thing I knew was that the retailers hated getting permits. They called it brain damage and a fully permitted site was attractive to them because they could get open much quicker and with less effort. Carly Ries (12:13): And let me guess, who had a fully permanent site? Joe Rando (12:17): That's right. So what about the sunk costs? Well, I spent so much already, but I knew this should not affect my decision either way. I knew that by that point in my life. The money is gone. The money to be spent in the future, is it a good investment or isn't it? So basically because of the wave situation, I decided to stick with it. I decided that they were gonna come around eventually and I was gonna get 'em. And in 1997, 7 years after I first saw the property, I got a phone call from the broker. Home Depot wanted to do a store on my site. The C sites were now in Vogue. After that we got Target. Circuit City, I sold on the land, which kept me safe when they tanked. Kohl's, Linens N Things, and I leased that to them and they died bummer and lots of other stores. By 2001, I was finished. Joe Rando (13:11): The project was a big success for me, the community and the retailers, as business was good for everybody. Now let's move on to quitting. I mentioned earlier that while I was in grad school, I developed some technology to figure out where to put retail. Initially, I just used this for my own development business, but people heard about it. And the next thing I was selling it to one of the largest real estate developers of the time, a company called DeBartolo. The world had just beat a path to my door and I started a separate company initially as a solopreneur. I pursued this business of selling site selection technology to retail developers. I called it Retail Analytics. Then I started hiring and got a great little team put together. From there, we quickly got our first six figure annual recurring revenue customer. Joe Rando (13:58): It seemed like the sky was the limit. We then started targeting retailers as developers because there were more of them and they could benefit from the technology even more than the developers. Things seemed to be going well but selling software to large companies involved the IT budget and something was happening. The year was 1996 and there was this new thing called the internet coming on the scene, retailers weren't sure what to make of it, but they were nervous and all their attention was on getting the information super highway as it was often called in those days and getting it understood and figuring out what they were gonna do about it. The result was that we were making no progress. We had two customers and that was it. The only thing to be done was to find a way to avoid the IT department and it's budget. Joe Rando (14:46): There was a solution, but I hated it. Instead of selling software as a service, which I wanted to do, we would sell services themselves, performing analyses for the retailers and the developers. Retailers still needed to build new stores and developers needed to place shopping centers. This was a very different business and not the one I relished to be in, but I had a great team and a strong passion for the technology and I decided to do it an attempt to wait out the exclusive focus on the internet. We ended up doing some really cool stuff, but unfortunately couldn't find a way to do it that was profitable. So we were losing money on these services. I was feeding the business and the cost was significant. It was time to step back and take stock. This was really hard as I was so invested in the people and in the tech. Fortunately my father was a smart businessman and he gave me the unbiased perspective I needed. Joe Rando (15:37): Let's walk through it. Although some of this analysis, as I said before is Monday morning, if you know what I mean? Did people like the tech and the services? Yes. The ones that used it did, Did we have enough customers for the services? Yes, but for the software, not even close. Were we making or losing money? We were losing significantly. Do we have enough working capital? At this point I had made enough in my real estate development business to feed it if I wanted to. Question was, did I want to? Did I like doing this? Nope. I had lost my passion for the new services business. It wasn't what I wanted to do. How is my lifestyle and stress level? terrible. I am a morning person. So I would wake up at 2:30 AM to start working. I was exhausted and very unhappy. Joe Rando (16:26): Was the wave with us or against us? The wave was against the software business, which is what I wanted to do. With respect to sunk cost, I was in deep, but that really doesn't affect anything except my emotional state. Okay. So what did I decide? I decided to shut it down as gracefully as I could. I stayed close to the wonderful team of people and I did my best to move on. Needless to say it was very painful. So, now let's talk about hibernation. Confession. I lied about Retail Analytics. Yes. I shut it down, but not completely. Since I was owed money by the company I foreclosed and took all the assets. I kept one software customer and ran the business as a sole proprietorship. Bad idea by the way. So I really hibernated the business. I hired my old employees as part-time contractors and they kept it going with me in 2003, Bill Dakai. Joe Rando (17:25): One of those ex-employees reached out about starting a new company. Now that I was becoming clear that the internet wasn't going to destroy retail, we started Trade Area Systems together. I used the profit from the sole proprietorship and yes, it was profitable, to fund the new company via alone. Soon we got a second customer. Bill's old employer, CVS. Weirdly we had two customers, one of the biggest shopping center owners and one of the biggest retailers in the world. But yet it started off slow. Bill brought some great ideas, but most of the industry still wasn't quite ready. So what we did is we ran the business really carefully and we slowly nurtured the industry . We ended up selling it in 2020 and we're both very happy. So with respect to hibernation, it's a great technique when the wave is temporarily against you and you believe it will turn back. Joe Rando (18:12): The hard part is knowing whether it will turn back or not. I never believed that physical retail was going away. So I knew that eventually retailers would need to invest in technology to help place stores. I had a solid reason there to believe the wave would turn back. Going back to your comment, Carly, if I had a thriving Beanie Baby business, I might not have banked on the wave turning back. So that's hibernation. The next one I want to talk about is adjusting. Okay, this the fourth thing you can do. And we're gonna get really up close and personal here because I'm gonna talk about LifeStarr. Sometimes the best strategy is to adjust or redefine the business. Carly Ries (18:51): I'm just gonna jump in for people that are just now listening. This podcast is put on by LifeStarr. So, if you're confused about the connection between the One-Person Business and LifeStarr, they're kind of one and the same. Joe Rando (19:01): Thank you. I didn't even think about that. So this is what I did when I added the services to Retail Analytics. That was a failure, but sometimes it works. So in the beginning, LifeStarr was just the app and we spent all our time and energy on it alone. As you probably know, I am a huge proponent of market positioning and the app was awesome, but I was struggling with how to position it in a very crowded task management market. When we first released the app, the response was underwhelming. We had built a great free app for working with anyone else who had the app. It was like a social network for working together, but we ran up against what they call the cold start problem. People would sign up and no one they worked with was on it. We had some features to let you work with people that weren't using the app, but they weren't really sufficient. Joe Rando (19:48): That meant the app was not much more useful to them than any other task management app out there. Plus our target market was people who wanted to work beyond their team. This is not a good target because there's no place where those people congregate. Small business fits the bill, but that's a pretty huge target in and of itself. The last issue was the app was obviously life-changing, but only after a significant amount of effort to get all your stuff in it. Most people never got there. The ones that did raved, but there weren't enough of them. So we stepped back and we looked at the situation. Did people like the app? Yeah, a few did. We all loved it? We were using it like crazy. It was a team of diverse people and I believe that the people on the team committed to it and reaped the benefits. Joe Rando (20:33): The customers weren't doing the same because they didn't even know they had a pain point that they actually had. So we had a problem there. Did we have enough customers? Well, certainly not. Were we making or losing money? We were losing money because we weren't selling the app nor were there enough people to run ads. Did we have enough working capital? Yeah, we did. Did I like doing this? Okay. I love this business and I'm extremely passionate about it. How was my lifestyle/stress level? Well, as the app first floundered I started to stress. Then I made the decision to adjust and my stress level dropped. What about the wave? Was that with us or against us. There was no discernible wave, but there was a lot of task management competition, which is bad. We had to find a way of distinguishing ourselves and leave it to Carly to figure it out. She suggested we make the app for solopreneurs and other One-Person Businesses. I was mildly intrigued until I did some research and learned that there are 50 million, One-Person Businesses in the US and that it's growing to over 86 million in the next five years. That's more than 50% of the workforce in five years. And nobody makes a task management app for them. They all focus on teams and there was our wave. Carly Ries (21:46): I mean, you're welcome. Joe Rando (21:47): So with respect to sunk costs, we had sunk costs, enough that we'd be sad if it didn't work out, but again, we don't really make decisions on sunk costs. So what did we decide? We decided to adjust as follows. First we were gonna focus on those solopreneurs and other One-Person Businesses. We were gonna provide content community for them as well as the app, so we were gonna do more and for a very specific group of people that we felt we could really help. I'd been a solopreneur, Carly had been a solopreneur, other people on our team had been solopreneurs. We felt like we really had some value to add there. Then the last thing we were gonna do is make the app solve the email nightmare that most people face when that's their primary tool for working with other people and that's solopreneurs. Joe Rando (22:38): The team apps don't work for them. I want to note that this is as difficult as it sounds, but we did it. Here we are, the content community up and running and the app almost ready to launch. Sorry, we're gonna need to wait to see the results, but I really hope you follow along with this. All right. So what if you decide to quit? I've never really totally quit. It's probably a character flaw, but I've bailed on a ton of real estate deals and lost a lot of money in the process. That's not quite the same thing as shutting down a business though it is close. There are some things to know if that really is the right decision for you. Some things you really want to do. The most important thing is you want to control the process as much as possible. Don't put your head in the sand and hope it all works out. Just ignoring the bad news. It's not a good way to go. Carly Ries (23:30): We actually have a link in the show notes with a checklist that might prove helpful. So I'll be sure to put that in there in regards to this. Joe Rando (23:36): You should definitely hire a professional to help you with this. Usually an attorney. It costs money, but not as much as screwing it up and getting sued or tagged by the government for taxes or something. The next thing is, having the guts to start a business is nothing to be ashamed of. Most people would rather die than do that. So don't be ashamed. Don't blame yourself. Trying and failing is way better than never trying. So you really need to forgive yourself and hold your head high to start the next chapter in your life. Don't feel bad. And the reason you're not to feel bad is because you can make a list of the lessons that you've learned. You're a lot smarter than you were before. Make that list of all those things you've learned and the positive you've gotten from the experience. Joe Rando (24:19): Let me just give an example of that. When Retail Analytics failed, I felt really bad at first, but I came out with a better appreciation for how a business should be conceived. I made a ton of contacts that I never would've made otherwise and I had a lot of cool experiences. I actually got to speak in front of 5,000 people at Oracle Open World with Paul Ottolini, who was then the future CEO of Intel. That never would've happened otherwise and it was an awesome experience. Still the biggest crowd I ever spoke in front of. Another example, my friend, Mitch Ribak, who spoke on this podcast about real estate awhile back. Before that he was in a number of businesses that failed, including an internet dating service that died in the internet bubble crash in 2000. But Mitch took his internet marketing skills to the residential brokerage industry and did fantastic. He's now a juggernaut at EXP Realty and you'll see him speaking all over the world. So if you fail, find the silver linings and move forward. I bet you find success if you keep trying and keep learning. Carly Ries (25:20): Joe, this has been so helpful. Actually next week we are going to pick up on more of a motivational approach to this and how to stay motivated if you don't want to quit, but are having a hard time continuing forward,. I'll be more, here's how to stay focused. Here's how to avoid distractions and things like that. Joe, thank you so much. This is very informative, Joe Rando (25:38): Very fun. Carly Ries (25:39): Awesome. Well that wraps up another episode of the One-Person Business podcast. Be sure to visit LifeStarr.com/podcast to subscribe and listen to past episodes. Or you can find us anywhere you listen to your shows. We'll see you next time. Closing (25:55): You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes, running a One-Person Business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures. At LifeStarr, we're creating a One-Person Business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com