(How to Know Whether it’s Time to Fix or End Your Business)
“Should I work at saving it or just throw in the towel?” This is a question I get asked frequently from business owners who are trying to determine whether or not their current business is worth saving.
No one wants to throw the towel in when it comes to their business. That seems harsh and a little like abandoning your own child.
But just like tough love parenting, sometimes it becomes necessary to evaluate whether what you are doing is working or perhaps you need to think of some other alternative.
Here are some ways to determine if your business is worth saving or not.
The obvious one would seem to be whether it is making money or not but even businesses that are not really in the black can be worth keeping.
Let’s look at some definite ways to determine which direction to take
- Have You Observed a Consistent Increase in Profit Over Time?
It does take some time for some businesses to turn a profit however in all industries you really only have a glorified hobby if you aren’t recognizing some income after a respectable amount of time.
It’s really not the size of your profit but the fact that you are making one and it is increasing steadily that determines whether your income trajectory is heading in the right direction. So if you started with a $200 profit and in a few months you are realizing double or triple profits you are at least improving your margins.
Spending more than you are taking in especially after you have been in business for a year is a very dangerous red flag!!
- Are You Reducing Your Overhead Margin Effectively?
Starting up a business can be costly, particularly brick and mortar ones. However, over time, you should be able to realize how to save overhead costs and draw down the expense it takes to operate your business. If you are constantly spending money on your business but not making any at your business, something is very wrong.
- Do You Enjoy the Work You are Doing?
I cannot tell you the number of people who continue to try and maintain a business because they think they owe it to a family member to stick with it or because they feel obligated to keep going regardless of how they feel about the business.
You can’t expect something to thrive if you have no true interest in its success beyond the obligation.
The best thing you can do in that case is either end your relationship with the business or terminate the business,.
- Do You Know What Areas Require Your Input and Which are Best Delegated?
Business owners who believe they alone should wear all the hats often discover they either burn out or resent their responsibilities to the business. If you are trying to juggle everything from web design or marketing to interacting with clients and accounting you may doom your business.
Even if you are thinking that you can’t afford to spend any money on your business, critical investments that help you run your business more efficiently can actually help increase the profit.
- Are You Puttering in Your Business or Actually Trying to Drive Sales?
You have to decide if you are creating a true side hustle or just want a hobby. It’s okay to just putter if you really want to dabble in some aspects of earning extra cash but if you want to make significant income from your business, you have to commit to consistent follow-through and not just a “whenever I have the time” attitude.
I tell clients they can choose to plant some seeds or nurture a garden but the input will determine the output and one will definitely take more effort to sustain the results than the other.
- Do You Seek Constructive Criticism Regularly?
Many business owners exist in a bubble that works for them until something happens that “pops” their ideal world. Often this is a result of being self-centered and too proud to work with their competition rather than against them.
If you do not have a solid circle of mentors, coaches, other business professionals, and/or advisors that will give you objective input, you will only see your business through a single lens; yours and your perspective will be deluded by lack of depth.
I meet regularly with a group of coaches, mentors, and other advisors. It is inspiring, educational, and often just what I need to gain clarity and improve business growth.
- Do You Know What Growth Your Business is Capable Of?
Not all businesses can garner 6 or 7 figure incomes. One client I worked with had the potential for this type of income but really chose not to invest her time and energy into having her business grow this way.
That is perfectly acceptable, however, I have also had clients who want to grow a select niche market into a 7 figure income without recognition of the limitations to prevent that from happening.
Just like you may need to have realistic expectations for yourself and your children, you need to have realistic expectations for what to expect of your business.
- Are You Overwhelming Your Business With Your Intentions?
All businesses need some care, guidance, and attention but chaotically trying to throw things against the wall in hopes they will make a difference can be damaging to your business.
I’ve talked with clients who have spent way too much time and money on marketing, advertising, public relations, and web design before they even had an idea about what they wanted to see happen in their business.
Like babies, all businesses are different, but also like babies, businesses will function better with predictable strategies that foster success.
There are steps to take if you want to increase your clientele and steps to take if you want to improve your marketing efforts.
Better to take steps than plunge forward erratically with no goal in mind.
- Do You Subscribe to the “Spend More Make More” Philosophy?
You may have heard that the more time and money you spend on your business the more success you will realize.
That is a dangerous philosophy, however. I always ask each of my clients if he/she believes this.
I think it is much more about the quality of time and the ways you invest your money in your business that make the biggest difference.
I have seen businesses with limited financial input thrive as well as those with unlimited resources fail.
The bottom line is whether you are having your money and time work for or against your business goals.
- Does Your Business Define You?
Some people are so entrenched in their business, they cannot separate their persona from it.
I once coached a man who no longer really wanted the responsibilities of being a business owner but he was having trouble letting go because he shared that everyone in the community knew him by his business.
Yes, a business can be a legacy. But, you can re-invent yourself many times. If you are holding on to a business as an identity then think of it as holding on to a haircut that no longer works for you.
Maybe you need a new haircut!
Never let your business be who you become!
You do sales, coaching, advertising, design, politics…However, you are not those things.
Seeing yourself as the business can be flawed and often very inaccurate of who you truly are and what you are capable of.
Whether your business fails or succeeds is not necessarily a reflection on you at all. There are many factors that determine whether it’s time to wave the white flag.
Do not think of yourself as a failure if you have a business that you have to let go but rather realize how wise it is to know when it’s time to eliminate something that is not working or when it’s time to get assistance for something that can be repaired.
If it were your personal health you would seek advice from experts to determine if there was something that could help you get better.
Your business is the same.
Maybe it is time to hang it up or help it out.
Seek some expert advice and do what is best for both of you!
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