If you come from nothing, you’ve most likely been trained from a young age to never give up until you get something. This mindset can take you a long way in life. If you are a leader who comes from nothing, one of the hardest parts of the job is to go against that deeply ingrained mindset and admit when it’s time to cut your losses.

Like a gambler or a day trader, the effective leader needs the awareness and the mental discipline to know when a situation is trending downwards. Staying the course and never quitting can be noble approach, but you must know how to recognize when you are the cow looking for shade in the slaughterhouse.

In the summer of 2019, my mental discipline was tested. After almost two years managing a high-volume restaurant, my boss had seemingly made up his mind that I was not the type of manager he wanted. My biggest weakness, in his eyes, was my willingness to tell the truth as I saw it, not as he wanted to hear it. It was my willingness to push back and challenge him to stress-test his ideas which, instead of seeing as a positive, he saw as a series of personal attacks against him. He had experienced the infamous “crossover to insecurity.”

The writing on the wall

By June, shortly after our “yes-man summit,” I saw the writing on the wall—this was not going to be a long-term relationship. Seemingly overnight, the detached owner began nit-picking and micromanaging. He became more aggressive in his tone with me. And so began a cold war.

I knew the game he was playing, and it wasn’t one that I was willing to play. His hands were tied. He couldn’t outright fire me—he knew I was his best manager in the company, and he didn’t have anyone ready to take on a project of this magnitude—100+ employees, $4M in revenue. All he could do was apply pressure little by little while he came up with a plan, and hope that I would eventually break. I knew it was time to cut my losses and get out. So, I called his bluff.

Cultivate an exit strategy

For the next three months, I took a proactive stance. I knew we both needed an amicable way out of this situation before things took a turn for the worst. Under the radar, I began training my assistant manager, subtly grooming him to be my replacement. I allowed him to take on more responsibility. I gave him the keys. I took an extra day off each week. I even took a much-needed vacation. I needed to let off some steam, and in the process, I was cultivating my exit strategy.

I didn’t want my staff to be affected unnecessarily by the rising tensions. I was the cow heading to the slaughterhouse; I didn’t need them to follow me. But I recognized that while leading such an amazing crew of people, it would do them no good if I allowed them to see this war play out in front of their eyes. So, for three months, only I knew I’d be leaving. I knew I’d be doing what most leaders think they should never do—giving up on a bad situation before it got worse. I knew a cold war between me and the owner would ultimately lead to a breaking point.

I knew it was time to cut my losses.

By September, it was all but over. Things had reached that breaking point I anticipated. I’d been doing my best to keep a restaurant, located on a college campus, afloat through the dog days of summer, and we were beginning to turn the corner as the university returned for the semester. But the owner had no plans on keeping me. And I had no plans on staying. He had seen how much progress my assistant manager was making, and it was time to make a move.

I had handed him his exit strategy on a silver platter.

The owner rarely came to visit the restaurant. And this time was no different. Continuing his daily check-in calls with me, his tone shifted dramatically from aggressive and tense, to downright disrespectful. What he said to me, on what would become my final day, I cannot repeat. But it amounted to a declaration of his endgame. All it took was just one phone call for the levees to burst. In a rare moment of lost composure and visible anger, I decided to let loose. I told him exactly what was on my mind. I handed him his endgame on another silver platter…

I told him I was finished.

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No matter if you are a leader or a follower, gambler or trader, and no matter how you’ve been raised, there will always be that thing you’ve put so much work into that you cannot possibly consider giving up on. For me, it was the restaurant. I spent virtually all my waking hours for two years trying to build a successful restaurant, only to be thwarted by the man who owned it.

As a leader, you never want to give up on those you lead. You certainly do not want them to perceive signs that you’ve given up on them. But you do not want to be the cow leading them to the slaughterhouse along with you. Leaving them was the last thing I envisioned doing, but I saw all of the trendlines headed downward. I made the uncomfortable decision to leave several months prior because I didn’t want to burn more bridges than necessary. I didn’t want to drag my staff into the mess. And I didn’t want the restaurant to fail over a philosophical disagreement. The groupthink, yes-men, ego, and insecurity from the top became untenable. There was no path forward.

Tactical retreats and strategic defeats

To really know when it’s time to cut your losses, you have to appreciate the difference between tactics and strategy—between tactical retreats and strategic defeats. You have to have vision, foresight, and awareness to know when a bad situation will get worse. In this story, it may have been a cold war between me and the owner, but the entire saga was actually just one battle in the long campaign of my leadership career. You don’t want to risk losing everything for the sake of one or a few tactical battles. Know the signs when they present themselves. Know when to leave the table before you go bankrupt. Know when to tactically retreat before you suffer a strategic defeat.

Know when to cut your losses.