Know When to Hold 'em, Know When to Fold 'em (Published 2005) (2024)

Sometimes, an entrepreneur has to know when to throw in the towel.

Nine days before Christmas, Jonathan Rosen of Scarsdale, N.Y., shut down Mobelex Designs, the home-office furniture retailer and wholesaler that he founded eight years earlier. In its early years, his company prospered, but then a combination of global forces knocked him to his knees: the Internet meltdown; the economic slump; a stronger euro, which hurt him as he bought primarily from Spanish and Italian makers; and cheap imports from China.

Not long after, Mr. Rosen did the unthinkable for many in the entrepreneurial world: instead of trying his luck in another business venture, he took a job in corporate America for the security of a weekly paycheck. "Sometimes it's a smart idea to start a business," he said, "and sometimes it's a smart idea to end a business."

Small businesses fail all the time. Gene Marks, author of The Small Business Desk Reference, says their average lifespan is about eight and a half years. According to the Small Business Administration, about 550,000 small businesses close each year.

For Mr. Rosen -- 48 years old, married, and the father of two children -- it was simply time to trade brutally long hours and a dwindling paycheck for a steady income and a calmer life. "It's a large burden to carry every day when you are strapped with large bank debt, inventory you can't profitably sell and sales that are diminishing," he said. "You have the payables and receivables memorized. You talk to your creditors and you tell them the truth. But you get tired of making those calls. You go to work every day with a pit in your stomach." When he decided to close last June, he recalls thinking that he just had to get it over with.

By the end, with 2004 gross sales down to $250,000 from a peak of $1.3 million in 2000, he calculated that he would need $750,000 to keep going. And he knew that whoever provided the money would demand a say over his business. "If I had to give up control of the business, then I didn't want to go forward," Mr. Rosen said.

On his last day in his showroom, his telephone rang constantly as he said goodbye to suppliers, shippers, customers and others around the world. He thought of all the things he would miss, like flying to trade shows in Milan or taking a Spanish colleague to a Chicago Cubs game.