Nobody wants to admit that their business dreams have fallen flat but the best entrepreneurs are the ones that know when to cut their losses and move on. It’s only natural that you’ll want to carry on and try to make the business work, especially if it’s your first one. But the longer you keep a failing business open, the more money you’re going to pump into it and you won’t see a return on that money. That’s why it’s important to recognize when a business is doomed to fail and get out before you waste any more money.
However, not every business that runs into trouble is guaranteed to fail. If you’re running out of cash but you’re still making progress, you might just need a bit more time. In that case, it can sometimes be worth putting a bit more money into the business to see whether you can make it. Knowing how to work out whether you should close your company down or carry on working at it can be difficult, so here are some of the tell-tale signs you should look out for.
Are You Seeing Growth?
One of the most important things in any new business is steady growth. If you aren’t seeing an increase in revenue which gives you more money to put back into the business, you’re not going to move anywhere. This is one of the things you need to consider when deciding whether to shut the business down or not. If you’ve been going for a year, your cash is starting to dry up and you still haven’t seen much of an increase in sales, putting more money into the company isn’t sensible. All of your money is just being eaten up by your running costs and if you invest more, the same is going to happen. But if you’re seeing steady growth and you’re coming close to breaking even, putting a bit more cash into the business to keep it afloat until you reach that point can help you to save a business. Look over your finances and try to work out how long it will take you to break even. If you think you can do it in a few more months, it’s worth continuing. But if you haven’t seen much growth at all, it’s time to cut your losses and get out before you lose any more money.
Can You Find More Money?
This is another thing to consider because if you’ve already borrowed quite a bit of money to fund the business, you might struggle to find more. In that case, it’s not really up to you. You’ll be forced to close the business because nobody will give you the money to carry on either way. However, if you think that you can make the business viable with a little more time, you need to find that money from somewhere. If you’ve already lost quite a bit of money in the business, your credit score may have suffered. This is a fairly common problem for business owners that are struggling but if you do a quick search for payday loans near me no credit check, you should be able to find some smaller loans. Failing that, you could always try to get some investors to back you. Just be aware that you’re going to struggle to find any that are willing if you’ve already lost a lot of money.
Are You Enjoying It?
Most of the questions on this list are to do with finances etc. but this is an important thing to consider. The reason you started this company is that you had a product idea that you were passionate about and you wanted to make it a reality. It’s an exciting thing to do and even though it’s not all going to be fun and games, you should still enjoy running your company. But if you find that your health is suffering, you’re not sleeping and you dread going into the office every day because you just haven’t got a clue how you’re going to keep this business afloat, you’ve got a problem. Do you really want to keep this business afloat if it’s causing you that much stress? There’s no shame in deciding that you don’t want to run this business any more. That doesn’t mean you have to give up on the idea of running a business entirely, you just need to have a rethink and consider going into a different industry or finding a partner to share the workload with. Running a business is always going to be hard but if you’re sacrificing your happiness and health for it, it’s probably not worth carrying on.
Are You In A Boom And Bust Industry?
Some markets will have a steady stream of customers all year round, but others will work on a boom and bust cycle. Seasonal products, for example, aren’t going to perform all year around. If you saw a big increase in sales initially, but now it’s dropped off for a while, that might mean that the product just isn’t going to take off. But it could also mean that you’re going to have a slow period before things pick up again. You should consider whether this might be the case because, if it is, shutting the business down now is a bad idea. There’s every chance that you’re going to bounce back in a couple of months. If you’re in a boom and bust industry, you just need to alter the way that you handle your finances so you’ve got enough money set aside to get you through those slow periods.
Instead of shutting the business down, why not try going into sleep mode? Essentially, this just means stripping the business back to its bare bones. Cutting down on as many overheads as possible so you can survive until the markets bounce back.
In some cases, shutting the business down is the best thing to do. But sometimes, the company can be saved so you don’t want to make any decisions without thinking about it carefully beforehand.