August 6, 2017
December 2016 – “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run…” – Kenny Rogers, “The Gambler”
When it comes to business, knowing all the tell-tale signs of when to put up the “closed” sign and say “uncle” is just as important as any management tip or recommendation that can be given on how to sustain or improve your business.
While logic dictates that a successful business owner will follow that common sense trait, that isn’t always the case and it creates a twofold problem. First, the challenge is recognizing the signs you should hang it up because if you ask 100 business owners who’ve called it a day what the signs are, there’s a pretty good chance you’ll get 100 different answers. Second, it’s not easy to admit failure. People often think with their hearts instead of their heads and failing to let go can end up costing substantially more than if they would’ve ignored their emotions.
Some of the most successful business owners in the world have had multiple failures, especially those who run multiple businesses. It would be foolish to think that people like Mark Cuban, Michael Bloomberg or even Bill Gates achieve success in every venture they get involved in. Each one of these moguls has had their fair share of fruitless enterprises. The difference between them and so many others is they know when to make the non-emotional call and say it’s over.
So, what are the signs of knowing when to close a business?
Although what appears below is by no means a comprehensive list, it should be more than enough for even the most stubborn business owner to realize that at some point, when things just aren’t working, it’s better to throw in the towel and close shop rather than try to avoid the inevitable.
1. Cash Flow
They say money is the root of all evil. But without it, your business, and more importantly you, won’t survive. While realistic timelines on profitability are going to vary from industry to industry, the primary goal of any business is to turn a profit. If you’re still seeing red ink after two or three years and you’re simply out of cash, this does not mean that you should seek a loan that ends up putting you further into debt. If you reach that point where your business fails to at the very least break even, you might be best served to call it a day and move on to something else. The last thing in the world you want to do is be personally responsible for repaying a business loan that you simply can’t afford.
There is an old saying that the customer is always right. However, you have to have customers in the first place, before you can bestow that responsibility on them. If you love your product or service more than the general population does, it might be time to rethink your business strategy. Ask yourself if your business provides a solution to a problem or issue. Then ask yourself if your company is focused on something other people need, or is it just something that caters to you? Be truthful to yourself when asking these questions as honesty can save you a small fortune. If you find that you are your company’s biggest fan and you’re not seeing positive results through income, it might be time to shut off the lights and say goodnight.
You spent considerable time and effort to carefully put together a team of employees that are virtual superstars in the roles you’ve put them in. But then, all of a sudden, your key employees start leaving your company and not necessarily for better opportunities or as they say, greener pastures. If your business is experiencing a mass exodus, you need to ask yourself why? Is there something your employees know about your business that you don’t know? Do you have an open door policy for suggestions and feedback? If you do not it could be costing you dearly. Have your employees tried to tell you something, but you simply didn’t listen to what they were saying? Often times your employees are your most important assets. Pay attention to what they tell you… and what they don’t.
4. Pausing Business
Sometimes it makes sense for a small business in a soft market to take a step backward and press the pause button. It allows companies to re-evaluate their resources, determine their direction, find their focus and get their game plan in place. However, that’s not a feasible option for some people, especially for those who do not have an alternative means of deriving income and whose companies have become money pits. If you find yourself in this situation and your company is on the brink of closing its doors, it’s probably best to bid your company farewell and move one.
What good is it to be a business owner if you can’t enjoy the fruits of your labor? It’s one thing to deal with the normal day-to-day stress of running a business, but if you find yourself having trepidation about going to your place of business, being unable to sleep, suffering from anxiety or panic attacks, feeling constantly fatigued, experiencing drastic weight gain or loss, then you should reconsider if your business is right for you. Your mental and physical health should be your number one priority and number one on your list of the signs to walk away. If your business is causing your health to decline, then it’s time to stick a fork in it because it’s done as it doesn’t do anybody any good – especially you or your family.