When to close a business?
Owning a successful business can yield good income while you enjoy the freedom (and responsibilities) of being your own boss. Starting out is usually the most difficult phase, but sometimes, for many reasons, even a business that’s run well may face problems it can’t overcome. It’s then owners may conclude that closing the business is best, despite emotional and personal cost. Knowing when to shut a company down, especially to avoid further losses, is part of business wisdom. Here are some points to consider about closing.
Revenues too low too long
A working business depends on meeting revenue expectations. While there may ups and downs, and flux in business cycles, if income deficits persist too long, you risk losing all your investment, with nothing left to start over. If your company has borrowed, you could also wind up in serious debt.After thinking realistically of the prospects for a rebound or better sales, it may be best to cut your losses by closing.
Personal health concerns
Running a business can be stressful. If you find it seriously affecting your own health, and delegating responsibilities isn’t a good option, you may want to consider either selling the business or shutting down.
Caring for products, not customers
Depending on the business, customer care may be as important as the product. In the service industry, it may actually be the primary product. If you find your business alienating or angering customers, even if you have a decent product, this can erode your market foundation and lead to collapse. In some cases, especially when turning company culture toward greater customer care proves difficult or impossible, or the firm has already lost too much good will, it may make sense to close the doors.
When a pause is not an option
There are occasions, not often, when an owner decides to suspend business for awhile. Perhaps necessary for many reasons, this may set the stage for further problems when resuming, chiefly irreversible loss of valued employees or current market share. Of course a business closed even temporarily earns no income for itself or its owner, while certain expenses continue. If you depend on your business for income, don’t wish to carry its continuing costs, and have no alternative source of funds, you may decide the soundest choice is shutting down.
Key employeesare the lifeblood of any company, without which it may sicken and die. They are often the source of new ideas or methods in production or marketing. uch staff leaving may be symptomatic ofdeeper issues-structural, managerial, financial, or otherwise. Ifyou can’t fix what’s wrong, despite careful analysis, and seeking sound advice, you may wonder if it’s time to quit. Try to consider this from all angles, then decide.