If you’ve ever operated your own business, you know how personal its success can become. Pondering the end of the endeavor can feel like preparing to end a cherished relationship. But as many successful executives will tell you, knowing how to fail prepares you to succeed. Thus, knowing the warning signs for calling it quits can help you move onto better things.
Ideally, you would have started your enterprise with a way of measuring when it was time to pack it in. If you didn’t do that as a part of your original business plan, you need to do it now. Otherwise, in your drive to make your business succeed, you can lose all perspective. Setting an end point – like six months in a row of losses – can help you maintain a rational outlook.
Funding sources drying up
If you are unable to get needed additional funding for your business – whether via financial institution loan, credit line, investment capital, etc. – it may not be just a case of the world failing to share your vision. It can (and probably should) be a sign that others simply don’t think your operation is viable. This lack of cash infusion can also be taken as a sign that your business has reached its natural ending point.
Debt levels can be used a “canary in the coal mine” indicator of the health of your venture. That isn’t to say that all debt is bad for a business, but if your debt-to-assets ratio is consistently above 50% or climbing rapidly, it may be time to consider a new path.
The future, not the past
One of the most common things that keeps captains of sinking business ships bailing water pointlessly is the idea that they’ve invested too much time and money to quit. However, this can lead to a whole lot of the proverbial “throwing good money after bad.” Take a serious look at what will your business will need to be successful. Does it seem like a one-in-a-million shot? If so, it doesn’t matter how much sweat equity or capital you’ve poured into it. It’s time to move on.
Have you thought long and hard about how your business can evolve? If you are in the mindset of trying to bend the market to your way of doing things, you may be missing out on some vital opportunities to see your endeavor evolve. If this is the case, your business may not need to halt just yet. On the other hand, if you’ve exhausted all these possibilities, it might be time to say goodbye.
Advice from a veteran
The Small Business Administration – on the web at SBA.gov - has a wonderful mentor program for business owners. Getting an outsider’s perspective can help you get a true sense of what the present and future hold for your operation. Just be sure that your mentor doesn’t have a vested interest in your business succeeding or failing.
The personal test
Are the struggles of your business causing you health problems? Are your relationships with loved ones suffering because of the stress your company is causing you? If you started the venture to improve your quality of life or that of your family, consider if that is really happening. It’s OK to end your current endeavor if it isn’t increasing the happiness in your life.
The decision to terminate a business shouldn’t be made based on emotions. Instead it should be a logical estimation of the future of the enterprise. That kind of approach will allow you to make the most out of your efforts now and in the long run.