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Know when to fold Featured

11:44am EDT October 29, 2001

By today's standards, my grandfather would probably not be considered an educated man.

He had no formal college education, but he was very wise. You might say he had street smarts. He also had a way of using analogies and stories to teach us the ways of the world.

He especially liked to use horse stories; one of his favorites was the one about beating a dead horse. He used to say that a prudent man, once he knew his horse was dead, would either find a new horse or find another means of transportation.

If that's true, why do so many entrepreneurs and business managers seem to have a hard time with such a simple concept? Why do so many strategies seem to be based on reviving the horse rather than accepting the fact that this horse is not going to take you where you want to go?

Instead of moving on to a new horse, we try a bigger whip. If that doesn't work, we try sharper spurs. Then we try to talk to the horse and coax it back to life. In the worst cases, we may even promote it, thinking that will wake it up.

We keep pouring our limited -- and often high-cost resources -- into a revival process. Then, when we finally admit that the horse is gone, we have no more resources to invest into our next horse.

Knowing when to give up on the horse is important in all aspects of your business. It could be as large as your overall business strategy, products or services. Think of all of the businesses that used to be viable but are no longer -- the typewriter sales company, the small office supply store, the corner hardware store.

The owners who knew they had a dead horse before it took its last breath likely found a way to change horses and move on. But this also applies to smaller functions within our businesses and even to our employees and managers. Instead of facing the fact that a particular manager or employee is not going to change and become the star we had hoped for, we keep ''beating,'' sometimes for years, until we finally admit defeat.

In today's changing environment -- both economically and technically -- it is important for owners and managers of growing businesses to stop beating those dead horses and learn how to determine when it is time to fold and move on. Here are some suggestions to help you accomplish this.

Never fall in love with your horse. If you do, admitting that it's over and that you need to move on will be difficult. It's easier to leave emotion out of the decision if you simply like your horse. This may be extremely difficult for those who have nurtured and groomed their horse for many years.

The longer you wait, the less likely you are to win the race. Your horse may not be capable of getting you around the track fast enough, and if you let competitors get fresh horses before you do, it's likely you'll be behind for a long time.

Finally, remember that just because it's still breathing doesn't mean there's a future. Some of us feel that as long as the mirror fogs up, there's still hope. The fact is, even if we get the horse back on its feet, it's still the same horse. The next time we try to have it perform, it will likely collapse again.

As my grandfather said, sometimes all it takes is a little logic and some common horse sense. Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Contact him at (216) 831-2663.