Business guide to Coronavirus
How do you know when it’s time to close your business?
All businesses go through peaks and troughs. But when times are tough, how can you tell whether you’re going through one your business might be able to recover from or whether it’s the start of a terminal decline? Here are four signs to help you make the call.
1. You’re losing profits
We go into business to make a profit, so if that isn’t happening, it’s a pretty clear sign that all is not well. Of course, in the beginning, no business is banking on an immediate return on their investment, but if you’re well past your projected break-even point, it may mean the business simply isn’t viable. So, if your figures aren’t adding up after a long and trying time, it could be time to close.
2. Your passion has dwindled
“As soon as something stops being fun, I think it’s time to move on. Life is too short to be unhappy”: Richard Branson, serial entrepreneur, sums up the importance of passion and enjoyment if you are running a business.
Businesses run on energy as much as cash flow. If work feels like a slog, if the business weighs you down or reminds you of why you left your corporate job, then it could be a sign that this is no longer the place for you.
However, this doesn’t mean you have to dissolve the business entirely. Another option might be selling your business to an interested party. This way, the venture can remain operational, you’re preserving jobs and you still get to move on.
How much is your business worth?
We've partnered with Business Valuations Online, a CPA Public Practice, to provide members with affordable business valuations and health checks.
3. Your product demand declines
You love your product and think it’s the best thing since sliced bread, but the market doesn’t feel the same way? Perhaps they used to love it but the relationship has lost its sparkle and they’ve moved on? It happens. In fact, it happens to some of the biggest and most successful businesses in the world (think Blockbuster, Nokia, Kodak).
In this situation, some businesses might be able to adapt their offering to regain momentum and meet new market needs. However, if you find you’re unable to adapt your offering, it may be a sign that it’s time to close the business.
4. Your employees are unhappy
Your team might have a different perspective and notice things you don’t see. So, if team morale is low or you have a high number of people leaving the business, it can be a clear sign of business trouble.
Here, however, closing your business isn’t necessarily the only option. The better alternative might be to have an open conversation with your team to find out what’s going wrong and try to find a way to fix things and get your operations back on track.
It’s hard to give up on a business you’ve poured your heart, soul and earnings into. However, there are signs to tell you when it’s time to consider your options.
To learn more about maintaining your business, visit our resource centre.
