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Why the Best Entrepreneurs Know When to Quit

quitting your job Credit: Quit Image via Shutterstock

The key to being a good entrepreneur is knowing when to give up, new research shows.

A study published online in the International Small Business Journal revealed that although persistence is a key to business success, entrepreneurs might be more prosperous if they not only understand when to start a business and take risks, but also know when to abandon it and find something that provides a greater opportunity.

"Entrepreneurs need to balance that desire to persist, which is in fact what often makes someone a successful entrepreneur, with the ability to sense when it is time to walk away," said Bobby Garrett Jr., an assistant professor of entrepreneurship at Oregon State University and co-author of the study.

[The Big Myth About Entrepreneurship]

As part of the study, researchers analyzed the decision-making process of 135 entrepreneurs in high-tech industries. They found that even when confronted with another business opportunity that could yield successful results, many entrepreneurs resisted quitting their current venture.

"It's escalation of commitment," Garrett said. "When an entrepreneur has invested resources into a new business, they have difficulty letting go even when things go south or another opportunity arises."

Garrett likens this thinking to that of a gambler who spends an hour at the roulette table and thinks that if he sticks with it, he can win. He said an entrepreneur's thought process is not dissimilar to this.

However, Garrett acknowledges the same doggedness is also what makes entrepreneurs successful.

"Everyone knows that entrepreneurs often fail," Garrett said. "That same persistence, and ability to keep trying against the odds, is also an admirable trait, especially when that persistence pays off."

In their study, Garrett and lead author Daniel Holland of Utah State University recommend that potential entrepreneurs keep the risk versus reward of any venture in mind, and evaluate the chances that their startup may succeed.

Follow Chad Brooks on Twitter @cbrooks76 or BusinessNewsDaily @bndarticles, Facebook or Google+. This article was originally published on BusinessNewsDaily.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.