“We’ll understand if you walk away,” the chairman said, “otherwise we’ll give you a couple of months to try and turn it around.”
As the cascade of bad news washed over me, I froze.
“Patrick?”
The voice on the other side of the line pulled me back into the moment.
“You heard me, right?”
I considered the chairman’s offer and discussed with my wife, Jen, and business colleague, Chris. The truth was, we made a risky bet to join a little tech company a year before, and now, with the majority of personnel fired, it was on life support. The other truth? Chris and I would have to be willing to place a big bet on each other. The board would have to align and support us as we navigated through a company overhaul.
Refound or cut bait?
You’ve likely experienced a similar inflection point — a refounding moment — and if you haven’t, you will. Your company’s go-to-market plan is failing. Maybe a relationship is on the rocks. Moments like these beg the question: Should you put in the time and effort to take what’s broken and make it better, or do you cut bait and move on?
We decided to refound our flagging company, but the truth is, this isn’t always possible. Sometimes, it might be best to move on. So, how do you know whether a failing proposition is worth the time, effort and capital investment, particularly when there might not be a right or wrong answer? Consider three questions.
Is it worth your time and energy?
Pursuing one thing means not pursuing another. Attempting a refounding meant nixing a job hunt (back-up plan). We had to calculate whether the potential upside of the company was worth the time, energy and capital it would take to turn everything around. But it wasn’t just me that needed to reflect. A board of directors often struggles with the sunk cost fallacy and shiny object syndrome. Sometimes, it lacks management with the field sophistication needed to attempt a turnaround. Maybe a toxic relationship or work environment is poisoning talented people. Some failing businesses are simply not worth the time and energy. When you identify opportunities where the proper investment can right the ship, move to the next question.
Do you have a team you can trust?
Refounding is a team sport. And as I’ve studied other refounders, I’ve learned the same is true for most turnarounds. A great team helps analyze problems from different perspectives. The diversity of skill and thought is critical to any successful refounder movement.
If you don’t have a team or a board, develop one. A personal board of advisers will identify your blind spots to refine and illuminate the path forward.
Are the purpose and potential bigger than the problem?
Our problems seemed insurmountable. We were buried in debt and had no cash flow. Still, we believed if we could apply technology to solve some really big problems, we could change the lives of so many and create a successful enterprise.
Maybe we were too naïve to see that our vision and purpose were a touch grandiose. But, it was enough to keep us going. And I’m glad it did.
If the answer to all three questions is yes, don’t bail. Don’t give up. Instead, set out to be a refounder. ●
Patrick Colletti is the Co-founder of Net Health
