A large number of Australian businesses have been forced to close their doors with good over the duration of the covid-19 pandemic. As a business owner knowing when to quit will likely save you further heartbreak and also plenty of money. Starting a business is tough and it can be even tougher closing it both financially and emotionally.
Here is someone important advice that will help you better understand when its probably in your best interests to close your business.
You Are Failing to Meet Your Annual Revenue Projections
After two to three years of operating, it’s time to take your company’s financial temperature. If you are still not turning a profit and you’re out of money, this does not mean that it’s time for a loan that puts you further into debt.
Instead, it is probably safer to seriously consider cutting your losses so you don’t wind up in personal financial trouble. After all, the whole purpose of incorporating (or having limited liability) is so that your business and personal finances are separate. The last situation you want to be in is personally repaying a business loan that you can’t afford.
One of the biggest signs that a business should consider closing are personally putting money into the business, especially if they are using a credit card to make these purchases.
Taking on that debt doesn’t just hurt your pocket, as personal financial losses can also be devastating to your family and health.
Your Personal Health Is Also Struggling Both Physically And Mentally
If you are becoming unhealthy whether its to do with weight gain, weight loss, sleep deprivation, constant feelings of fatigue or constant anxiety it might be worth asking yourself is running your business worth the decline of your physical and mental health?
Craig Dangar from Vault Accounting says that one of the major reasons why a business owner often delays closing their business despite its many struggles and the huge likelihood of it failing is foreseeable future is because “many business owners often have a delusion that things are about to turn around. We often ask what needs to change for things to improve, if you can’t articulate it may be time to close,” says Craig Dangar.
Your Business Is Starting To Lose It’s Purpose
If you are forgetting why you started your business in the first place, this is a clear sign that your business is heading towards the danger zone. It could mean one of two things, and both usually lead to the same unfortunate outcome.
First, it could be that your mission is unclear. If essential checkpoints like objectives and a clear customer are missing, you could be spinning your wheels, spending unnecessary money and still not feeling fulfilled.
Secondly, it might mean that you’ve lost your passion for your mission, one of the biggest propellers when times get tough. Without this drive, who or what else will push the business forward?
Sometimes a small business owner might lose the level of passion that they used to have for their business when they first started operating Craig Dangar says that for business owners who find themselves in this type of position should be mindful that “a business should be a business and not a passion, by all means enjoy what you do, but when it’s a passion it is hard to make commercial decisions,” says Craig Dangar.
If coming to work is no longer fun and you keep thinking about wanting to work in a different job than it might be time to consider a career change and consequently closing your business.
You Love Your Product More Than Your Customers Do
If your business is struggling it is important to ask yourself is your business providing something that your customers are genuinely looking for? Is business offering products or services that actually solve a segment of societies problems? Furthermore, are you offering a product that you as an individual genuinely care about and consequently want other people to care about too?
If your answer to all these questions is not and you’re not seeing positive feedback through dollar signs it might be time to shut your down.
There have been plenty of scenarios where business owners have skipped to the conclusion assuming that they have a fantastic product and they get excited about sharing it with the thinking that everyone will love it and unfortunately the product ends up flopping.
In hindsight, many business owners have discovered that they were listening to themselves and not listening to their customers or potential customers. The went they described their actions was like trying to force-feed their business idea like their customers were babies eating strained peas for the first time.
Your Key Employees Are Leaving
Another sign that a business is struggling is that your most valuable employees are leaving in droves. Craig Dangar says that “In order for any business to succeed staff need to be well cared for but equally businesses need to identify their needs. If there is a constant turnover, maybe it’s necessary for you as a business owner consider what is causing this and look for solutions so that your business becomes a more desirable place for your employees to want to work at,” says Craig Dangar.
If your staff keeping leaving it would be wise to ask yourself is there something that my employees know about the organisation that I don’t? Have my employees tried to tell me something, and I simply didn’t listen?
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
Latest posts by Craig Dangar (see all)
- Facebook Scam Costs a Sydney Woman $8,000 - July 11, 2022
- Covid-19 Pandemic Places Internal Audits in The Driver’s Seat - June 27, 2022
- 89 Percent of Auditors Are Struggling To Prevent Fraud During The Covid-19 Pandemic - May 30, 2022
- More Construction Businesses Are Expected to Fold In 2022 - May 27, 2022