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When is it Time to Let a Struggling Business Go?
When is it Time to Let a Struggling Business Go?
For a business owner, the business is much more than a building, a stack of invoices, boxes of products or a name on a business card. The business is a dream. It is the sweat and tears of the owners. They most likely see the business as an extension of themselves, as proof that their ideas and creations have paid off. When a business owner is faced with the possibility of letting a struggling business go, they are in a sense letting a piece of them go.
Today’s economic climate is anything but predictable. Almost every industry is seeing a record number of closings. No one is immune. However, there is also a lot of hope out there for businesses in the form of bailouts and economic stimulus packages. For a business owner wading through a downturn in business, it can be difficult to figure out if the downturn is something to ride out or if it will destroy the business. While there is no set formula for figuring out for sure when the exact time is to let a struggling business go, there are some tips that will help owners make the decision a little bit easier.
The very first step when deciding if it is time to let a struggling business go is to take a very long and realistic look at the numbers. If your business does not have the cash flow to literally make day to day expenses, you are in very serious trouble. If your expenses keep increasing and the sales are literally decreasing before your eyes, you will end up drowning. While you may eventually recover from this kind of scenario, more often than not this type of financial drowning can continue until the well is completely dry.
One other sure sign it may be time to let go of a struggling business is if you, the owner and the company, are losing your focus. If you find you have ventured so far from your original mission statement or the initial intent of your product or service, you may be sinking. It can be difficult to actually see this for yourself; but losing your way is very difficult to recover from.
If you have found that you have entirely changed your product or service to the point where your initial target audience has left, you are probably on the verge of losing your hold on the market. For example, if a Mexican restaurant runs into a rough couple of months and decides they may be better off switching to a night club or lounge establishment, it could backfire. Once the economy recovers, the customers who made you a success in the beginning will not be back and the new crowd you are trying to draw in may not pan out at all. If you feel forced to implement this kind of drastic change, you are probably ready to let the business go.
You may also want to take a look at yourself and the rest of your management team when trying to decide if the time is right to let go of a struggling business. If the entire operation depends too much on you, there is a greater risk of failure.
It is important to be objective enough when you see the business of your dreams struggling. You have to be able to step back and see it as a business and not as an extension of yourself. The failing of the business you have worked hard to create naturally will make you feel as if you failed. And, it is natural to feel as if everyone involved will be let down in one way or another. Letting go of a struggling business sooner rather than later will be better in the long run financially, credit wise, and ego wise. Be sure to exhaust all options, give it all you have, yet be prepared to admit when it has run its course and it is time to move on to the next adventure.
