January 21, 2018  
 
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Selling a Business

 

Quitting Time

Closing down a business is never easy. Perhaps you started a business years ago and have been just barely eeking out a living. When is it time to give up, admit defeat and move on?

You finally realized your dream of owning your own business. But now several years have passed, and your dream is starting to feel more like a nightmare.
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The company's inability to turn a profit is taking its toll, leaving you with the nagging question, "When is enough, enough?"

The simple fact is that many small business owners allow their companies to limp along for years before they finally pull the plug. Calling it quits can be an emotional decision for an entrepreneur and common sense often takes a back seat to a business owner's desire to see his business succeed. Even so, there are certain questions you just can't ignore when determining whether or not to press forward in the hope of a miraculous turnaround.

Why isn't my business successful?

When you started your business, you were convinced it was the best idea since sliced bread. If that's true, you need to ask yourself why your business still isn't a success. The problem could be as simple as overstaffing or poor cost management. On the other hand, the problem could also be that the marketplace isn't as enamored with your idea as you are. Either way, you need to identify the source of the problem. If it's correctable - great. Make the necessary adjustments and move ahead. But if the problem isn't correctable, maybe it's time to pack it in.

What is the cost of staying in business?

Another question you need to ask yourself is what it will cost you to continue to do business. Tabulating the financial cost of staying in business is the easy part. The hard part is calculating the intangible costs of doing business on a go-forward basis. Personal stress, strained family relationships, and loss of personal morale are factors that need to be carefully weighed against the possibility that your company may eventually experience a turnaround.

Something else to consider is how many other opportunities you will be forced to pass up if you decide to wait out another year of negative profits. It's not unusual for small business owners to use their entrepreneurial experience as a tool to re-enter the workforce or to attract investors for a new business startup in an industry with a higher probability of success.

Do I still like what I do?

The most accurate indicator that it's time to close the doors is when you no longer enjoy operating the business you once loved. And if you're not enjoying yourself anymore, there's a good chance your employees and investors aren't enjoying themselves, either. Although you don't want to disappoint the people who are counting on you, most of them will appreciate your willingness to call it quits now rather than dragging them through five more years of losses. So, if a trip the dentist sounds more appealing than a trip to the office, do everyone a favor and begin the process of closing up shop.

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