Signs You Should Move On (From Your Business)
Moving on from your business can feel extremely disappointing and depressing. About one in five businesses close on their first year while half of the businesses close at the end of their fifth year. This rate is especially true for most mom and pop businesses who have dedicated a large portion of their savings to the investment. The number of retail stores that open is about the same amount as those which close down.
There are signs you should not ignore if you are having second thoughts about continuing your business. Hold your head up high. Business closures and bankruptcy happens all the time.
Closures due to personal reasons are often inevitable. The lifeblood of most small businesses also depends on the circumstances of its owner. The owner is often the manager and the employee of such businesses. If an owner gets injured or gets sick, the venture cannot run on its own. Even if it has a reliable manager as an employee, if the owner cannot himself do the tasks he needs to do, the business will get run down. The owner will be forced into early retirement.
Closures due to interpersonal relationships between the owners’ family members, friends, and employees can also affect how the business will run. Personal Relationships oftentimes affect the performance of everyone involved in the business. A negative outlook can contribute to the loss of passion for the owner and the employees. Such attitudes will inevitably pull the business down to closures and bankruptcy.
Weaker Economy and Wrong Markets
The economy is the ever-changing yet constant background noise of any business. The economy affects everyone more than anyone expects. An economy in shambles will dictate market movements. If the economy is down, the spending power of the average American weakens. A buyer who is hesitant to buy is lost profit. Scared consumers would rather spend on necessities than buy from small businesses that tend to overprice normal items to stay afloat. Lost profits inevitably lead to closures. Better pack up before that happens!
People save for a thousand different reasons. Markets are oftentimes just flat out uninterested in your product. Having the wrong visibility and location can heavily affect cash flow even with the availability of online delivery systems.
Debt and Cash Flow
Debt and cash flows are fundamental factors that entrepreneurs must always look out for when making business decisions. Having assets that are worth a lot but are, in reality, negative and illiquid assets can drag the business down. Negative assets are those which do not create any kind of profit for your company. These assets will not pay for the debt you incurred in getting capital for your business. Watch out for the cash flow and treat it as an emergency light to signal you when you should close shop.
Acquisition or Upgrade of Business
Not all business closures are negatives. Businesses can get closed down due to upgrades and renovations. When you see a professional general contractor scouting and surveying an entire closed property down, your local store might be due for a renovation. Sometimes, businesses must move on from their old business models and think outside the box. Closures for upgrades are needed when the supply cannot keep up with the demand.
Closures can also happen when you are selling the business to a bigger competitor. It doesn’t necessarily mean that it’s bad. Another competitor must be seeing that your model has the value that he or she is willing to spend on.
Cessation of businesses always happens even to the best entrepreneurs. You have to read the signs early to cut your losses. All it takes is for you to succeed one time to make up for the multiple defeats and downfalls you have endured.