The founder's difficult decision - to change direction, continue, or close the business
Sale
Sometimes selling a business is the best way to convert the founder's efforts into capital. The main thing is to do it at the right time and sell at the peak of interest, which rarely lasts longer than a few quarters. After 12–18 months, the value of the business may decrease significantly.
This is where an objective assessment of the business and development scenarios is particularly important: not all founders are able to look at the figures objectively. LLC "EIFOS HUB" consultants and financial advisors help determine the real value of the company, model transaction options, and avoid emotional decisions.
It is worth focusing on clear signals. If competitors are willing to pay for access to your technology or customer base, the market is consolidating, and further growth requires resources that you do not have, it may be time to consider a deal.
The history of Instagram illustrates this approach well. In 2012, the company had only 13 employees and 30 million users. Monetisation did not yet exist, but market attention was at its peak. The founders accepted Facebook's offer of $1 billion and secured the result.
Sometimes selling a business is the best way to convert the founder's efforts into capital. The main thing is to do it at the right time and sell at the peak of interest, which rarely lasts longer than a few quarters. After 12–18 months, the value of the business may decrease significantly.
This is where an objective assessment of the business and development scenarios is particularly important: not all founders are able to look at the figures objectively. LLC "EIFOS HUB" consultants and financial advisors help determine the real value of the company, model transaction options, and avoid emotional decisions.
It is worth focusing on clear signals. If competitors are willing to pay for access to your technology or customer base, the market is consolidating, and further growth requires resources that you do not have, it may be time to consider a deal.
The history of Instagram illustrates this approach well. In 2012, the company had only 13 employees and 30 million users. Monetisation did not yet exist, but market attention was at its peak. The founders accepted Facebook's offer of $1 billion and secured the result.
Closing a business
Closing a business is often perceived as a defeat, but more often than not, this deliberate and rational decision allows you to conserve resources. It is best to close a business in the early stages, while losses are limited and there are resources available for a new launch. The signs are usually obvious: the market is too small or stagnant, the cost of attracting a customer is higher than their value, the team is losing motivation, and the product does not solve the problem on the necessary scale.
The story of the video streaming service Quibi shows that even $1.7 billion in investment cannot save a company if the product is not needed by the market. The service closed six months after launch, recognising its failure too late, having spent money on promotion, marketing and licences.
Closing a business is often perceived as a defeat, but more often than not, this deliberate and rational decision allows you to conserve resources. It is best to close a business in the early stages, while losses are limited and there are resources available for a new launch. The signs are usually obvious: the market is too small or stagnant, the cost of attracting a customer is higher than their value, the team is losing motivation, and the product does not solve the problem on the necessary scale.
The story of the video streaming service Quibi shows that even $1.7 billion in investment cannot save a company if the product is not needed by the market. The service closed six months after launch, recognising its failure too late, having spent money on promotion, marketing and licences.
What decision should you make? When and who should you rely on? If you periodically think about closing your business or changing its direction and scope, then this article is for you.
Sooner or later, every entrepreneur has to decide whether to continue fighting for their business or change their strategy. Perhaps it is better to accept failure and start all over again from scratch. Or change the business model and continue? It is hard to believe that companies that seem indestructible today also once stood at this crossroads.
At first glance, an entrepreneur has dozens of options: they can freeze the business, look for a partner, transfer management, or try to survive in ‘for themselves’ mode. But if you look deeper, all these steps are just forms of one of four decisions. At the core is always a choice: admit defeat and close the company, continue and withstand the pressure, secure a result through sale, or change direction. It is this choice that determines the future fate of the business and its founder.
Sooner or later, every entrepreneur has to decide whether to continue fighting for their business or change their strategy. Perhaps it is better to accept failure and start all over again from scratch. Or change the business model and continue? It is hard to believe that companies that seem indestructible today also once stood at this crossroads.
At first glance, an entrepreneur has dozens of options: they can freeze the business, look for a partner, transfer management, or try to survive in ‘for themselves’ mode. But if you look deeper, all these steps are just forms of one of four decisions. At the core is always a choice: admit defeat and close the company, continue and withstand the pressure, secure a result through sale, or change direction. It is this choice that determines the future fate of the business and its founder.
Continue
Many companies survive for years, balancing on the edge of profitability. The market has not yet matured enough for their product. To stay in business, it is important to clearly understand that changes in the industry are working in your favour, key metrics are growing steadily (albeit slowly), customers are returning and remaining loyal. New players and investments are entering the industry, confirming its promising future. Most importantly, your business and what you offer are changing consumer habits.
LEGO also faced the choice of ‘close down or continue’ in the early years after its IPO in the early 2000s. The company decided not to close down, but to relaunch the business: it returned to its basic construction sets and found new partners.
Change direction (pivot)
Pivoting is not about abandoning an idea, but about finding a new path. By changing its business model, segment, or even audience, a company can retain its employees, achievements, and customers. This is most effective in the early stages: later, when infrastructure and commitments to investors are already in place, it will be more difficult to do.
The reasons for pivoting are usually quite obvious. Customers like the product, but the economics don't add up: people use the service but are not willing to pay for it. Sometimes customers use the product in a way that was not intended, and it is this unexpected scenario that turns out to be promising. Sometimes competitors get ahead — faster, cheaper or more convenient — and the only way to survive is to change course.
The story of Slack is a classic example. Tiny Speck spent several years developing the online game Glitch, which never became popular. But the chat feature with search and file sharing that was created within the game turned out to be more valuable than the game itself. The founders made a timely pivot, and the side product became the basis for a corporate communications service. As a result, the programme was bought by Salesforce for £27.7 billion.
The founder's difficult decision: conclusion
The main question a founder must ask themselves is: ‘Am I acting because I see potential, or because I am afraid to admit my mistake?’ The answer to this question determines not only the fate of the business, but also the trajectory of your entrepreneurial career.
At times like these, it is especially important not to face the problem alone. You need someone who can professionally evaluate the business, separating emotions from facts. LLC "EIFOS HUB" independent analysis and consulting services allow you to model possible solutions in advance and calculate the consequences of each step - from closure to scaling.
Many companies survive for years, balancing on the edge of profitability. The market has not yet matured enough for their product. To stay in business, it is important to clearly understand that changes in the industry are working in your favour, key metrics are growing steadily (albeit slowly), customers are returning and remaining loyal. New players and investments are entering the industry, confirming its promising future. Most importantly, your business and what you offer are changing consumer habits.
LEGO also faced the choice of ‘close down or continue’ in the early years after its IPO in the early 2000s. The company decided not to close down, but to relaunch the business: it returned to its basic construction sets and found new partners.
Change direction (pivot)
Pivoting is not about abandoning an idea, but about finding a new path. By changing its business model, segment, or even audience, a company can retain its employees, achievements, and customers. This is most effective in the early stages: later, when infrastructure and commitments to investors are already in place, it will be more difficult to do.
The reasons for pivoting are usually quite obvious. Customers like the product, but the economics don't add up: people use the service but are not willing to pay for it. Sometimes customers use the product in a way that was not intended, and it is this unexpected scenario that turns out to be promising. Sometimes competitors get ahead — faster, cheaper or more convenient — and the only way to survive is to change course.
The story of Slack is a classic example. Tiny Speck spent several years developing the online game Glitch, which never became popular. But the chat feature with search and file sharing that was created within the game turned out to be more valuable than the game itself. The founders made a timely pivot, and the side product became the basis for a corporate communications service. As a result, the programme was bought by Salesforce for £27.7 billion.
The founder's difficult decision: conclusion
The main question a founder must ask themselves is: ‘Am I acting because I see potential, or because I am afraid to admit my mistake?’ The answer to this question determines not only the fate of the business, but also the trajectory of your entrepreneurial career.
At times like these, it is especially important not to face the problem alone. You need someone who can professionally evaluate the business, separating emotions from facts. LLC "EIFOS HUB" independent analysis and consulting services allow you to model possible solutions in advance and calculate the consequences of each step - from closure to scaling.
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