Questions To Ask Before You Shut Down Your Ailing Business
It was Varys, the eunuch Spy Master in HBO remaking of George R.R Martins Game of Throne series who said, “Storm come and go, the big fish eat the little ones and I keep on paddling.” While this statement is encouraging, businesses have continued to fail at an alarmingly high rate all over the world.
If you own a failing business, you’ve probably had sleepless nights contemplating on what to do with the sick child in your hand. For all your efforts, the child might be terminally ill. Here are some of the questions you should ask yourself before you actually give up on your business.
1. What did I learn from this business?
Never close the business until you have learned everything there is to be known about the business. Why did the business fail? Saturated market? Inadequate income? No marketing push? Archaic equipment? Terrible blunders? A lack of interest? You must effectively answer these questions and many more about your business before you finally apply the lethal injection and let go.
If you have invested so many resources in a business that flops, you owe it to yourself to, at least, learn everything there is from the failure. We learn from our experiences. You must learn from this one. The repercussion of closing a business without learning enough is likely a bitter repeat in your next venture.
2. Is this business completely finished?
Nigerians have made jokes about the phrases finish, complete, and completely finished. To one conversant with this differentiation, these phrases are wide apart in meaning. Knowing the difference will have a major impact in deciding whether to close down or try harder. If your business is finished, it might be a problem that can be solved by a new team, bigger funding, more aggressive publicity and/or other major twerks.
If your business is completely finished then hold the requiem and move on. You have to be solid sure. And this is not a judgment to make based on emotions.
3. Am I directly responsible for this failure?
You may be and this is not a question to treat like normal nudging doubts. It is a career and life-defining question. You may have a penchant for churning out good ideas but suck at the execution. If what you did and the decisions you made are directly the reason your business is packing up, identifying this is not all. You need to determine whether this is your true calling. You may have to consider hiring a manager in your next venture or going into a partnership where someone with a better disposition for business will be in charge.
In fact, you may end up with the discovery that you should never own a business. To this, you can resort to go with investing in shares and owning stocks. While many of us dream of financial independence and being in charge of our conglomerate, be aware that the “being in charge” aspect may not the path you must take.
Decide how responsible you are for this failure and whether being an entrepreneur is your forte.
4. What are the implications of shutting down?
It will have more repercussions if your business is your only source of income. The implication is simple, you will starve. Or suffer in dire lack. Whatever the implication, a dead business is a dead business and staying put might get you into more debt, waste more of your time and sap your energy. If this business is your only source of income, you may want to dispose of it in such a way that it would afford you some sustenance until you think of another line of business.
Will someone sue you for an unfulfilled order? Do you have debtors? How can you handle them? Is your rent still valid? Is there any way to leverage this? What about the equipment? Is there any way they can be put to use to aid with your finances and give you a softer landing?
Ask as many questions as there are in order to make the best of the post-job situation. Note that no matter the consequence, a dead business must be let go. You may, however, choose to delay permanent closure in order to gain time and space to handle the closing processes.
5. Is this a cash flow problem?
Some entrepreneurs have had to stay in their paying jobs for a considerable length of time at the start of the enterprise to be able to sustain their passion and reduce the attendant cash flow pressure.
Cash flow is a critical part of a business and where it is lacking, the business starves. This is mostly true in situations where it takes a longer time for the business to turn a profit. Without adequate cash flow, a business will run into trouble.
If you discover that your business is failing due to lack of cash, especially knowing that the fundamentals are still solid but the business profitability cycle is longer than normal, then you may consider taking up a paying job, taking a bank loan or getting a partner. This will enable you to inject the much-needed cash into the business as required without having to shut it down. Although there is a clear downside to these options being a loss of control.
6. What resources can I take to the next business?
This is important as a direct bridge for your next venture. Did you make any contacts that would be useful in the next business? Is the customer base strong enough to sustain your next line of trade? Mind you, you should not try to make your next business fit into these resources? No, rather, get the resources and see how your next business can benefit from them.
By doing the latter, you have eliminated the possible prejudices that might negate your new effort. After all, if these resources were that perfect in themselves, they could have sustained your about-to-be-shut-down a business.
Image source: Small Business Administration
