Is It Time to Close My Business?

‘My advice, if someone wants to start a company, is that they should bear in mind that the most likely outcome is that it’s not going to work and they should only do it if they are really compelled to do it, you know, then you do it, even though the risk of failure is high’, these words, spoken by Elon Musk on ‘The Elon Musk Show’, BBC2, October 2022.

The statistics are readily available, revealing that 80% of entrepreneurs who start businesses fail within the first eighteen months and more than 500,000 small businesses close every year. And yet still we persevere, wanting to work for ourselves, be our own boss, achieve something special that we’ve built through our own endeavours.      

At what point should we decide to throw in the towel and say we need to close our business?

 “If you are working on something that you really care about, you don’t have to be pushed. The vision pulls you.” — Steve Jobs. And that’s at the heart of any successful business, having the passion and enthusiasm to see beyond setbacks and obstacles, consistently working towards the bigger picture to achieve those goals.

What changes those business dreams into a nightmare?             

At the outset there’s passion for a new business, a desire to go to work each day. But if that passion dissipates, perhaps after too many challenges, paying too big a price personally, professionally or financially, every hurdle can feel insurmountable, every rejection taken personally and eventually something has to give. Without drive and energy surely it’s time to quit!

The ultimate goal of any business is to provide a livelihood. New businesses often have plenty of ideas but fall down on their execution, lacking consistent, focussed effort. A business coach may introduce goals and accountability, but enough money has to be generated to cover hours being undertaken and to pay overheads.  

If you’ve no market for your goods or services and are effectively trying to sell widgets in a widget-free world, it’s time to acknowledge that you need to modify, adjust and adapt your business direction if you want to survive. Any business should regularly monitor their markets, figures and keep an eye on the competition, so becoming aware of any changes that are being implemented. Unless you’ve cornered a niche market it’s important to be offering something viable to as wide an audience as possible. Enthusiasm will only take you so far.

If profits have been consistently falling to a concerning, unsustainable level it justifies a thorough audit, especially if business looks good on paper.  Could you be being stolen from; aggrieved staff may justify their actions, feeling they’re entitled to take from supplies. Are inefficiencies or outdated equipment or methods hi-jacking your chances of being competitive and profitable? Are you hiring expensive staff to perform routine tasks which could be undertaken by someone less expensive? What about overtime, does that need investigating and are staff trained well enough to avoid making expensive mistakes?

Cash flow is often the biggest problem, particularly with new businesses. Sometimes the order book is full but charging a fair price or getting paid provides a major headache. Another cash infusion, the use of a handy credit card or bank loan, factoring outstanding invoices or involving an interested investor may be enough to weather the storm, but there must come a point where any emotional investment has to stepped away from and sensible business decisions are taken.  Is it time to start trading differently, maybe invest in online marketing, where you specifically target your ideal customer?               

It may be that your personal circumstances have changed and you’re no longer as invested in nurturing your business as you once were. Your health may have taken a downturn, causing your priorities to be modified, personal relationships may have suffered due to work-related stress, your financial aspirations may have changed as children finished their education and moved away, or your inclination to spend as much time and effort at work has diminished as your drive to earn money has been replaced by other hobbies and interests.

Or maybe you’re looking for a different work environment, with less working from home and more mixing and meeting with others, want personal connections or to earn a regular salary and associated perks. Could this be due to exhaustion and the need for a holiday or is it time to delegate or hire more staff?

Some people have an exit strategy from even the earliest days of starting their business. They’ve formulated plans to sell, bequeath or franchise their way into profitable early retirement. They face the challenge of stepping back from a successful business and letting someone else make major policy decisions about a business they’ve nurtured from scratch.

But in a business that’s struggling stepping aside can be a wrench. Would it be possible for staff or management to buy or form a co-operative, or sell and remain in the business as a consultant?

It can be tempting to persevere and continue with a struggling company, saying ‘just another loan’, ’a few more months’.  But a successful gambler recognises the skill in knowing when to cut your losses and walk away. This isn’t failure, but rather a major learning experience, giving insight into your customers, skills and contacts for future reference.