Okay, you already set up your business. It has been running quite okay for several months. But reality bites and slowly you are encountering several problems already. It has been losing money extensively. And you will come up to a certain point and ask yourself: Is it time for me to shut down this business?
This is the most difficult decision for a committed entrepreneur: close the business because it is not making money anymore and is in fact, a ‘money black hole’. Many committed entrepreneurs hang on despite the money losses they have and continue to incur. They just could not accept defeat.
Okay, okay, I know what you are feeling. You feel that if you can just hang on a little bit more, the wheel of fortune may turn in your favor and your business will be back to become profitable again. Because of your persistence and strong commitment, you’ve worked so hard in your business that you can’t seem to just merely shut it down. And so you say to yourself. “I must stay on and try even harder!”
Well, I salute you for saying this because this is the true test of a real entrepreneur. A lot of entrepreneurs, especially those ones who have big businesses, find it very difficult to shut down their business for fear of losing their face among their customers, friends, neighbors, and fellow entrepreneurs.
Swallow that pride and instead assess your situation objectively if you are really in need to shut down your business. A real entrepreneur knows when to quit, pick up the shattered pieces, and start all over again. There are a lot of stories about entrepreneurs whose business became bankrupt but went to another venture and finally became successful. They just persevered and were very persistent. Brave entrepreneurs are not afraid to fail because they know how to start another one. They can smell profits despite adversity and they can easily seize opportunities whenever there is one available.
So let’s go back to the initial question: Is it time for me to shut down this business? For me, the most important things that I would assess are my cash flow and my extra capital. Put simply, the monthly income and expenses and the extra capital that I can put for it to continue operations. If both of these have been bleeding and cannot survive at most, 6 consecutive monthly losses, then it’s time to fold up.
I suggest asking for a professional help and opinion as to whether your basis to shut down your business is based on fact. Objective analysis is very much needed. Look around and see if your fellow competitors are also failing. See if a trend is fast approaching. Are there any technological breakthroughs that made your business obsolete? Or maybe a simple case of the whole world economy turning sour as effects of the global financial crisis turning most economies into recession?
When your business is about to fold up, it definitely gets lonely. Your friends may even abandon you. Get the courage to go on with your life, perhaps in another business. It’s not the end of the world yet when you failed. Life is full of ups and downs. Learn to ride it and avoid making the same mistakes all over again.