Before closing a business, there are certain factors that the entrepreneur should look up to. Lack of money and growth are the two main reasons that contribute to this factors. Not getting the expected results is also an indicator that the business is not doing well and it is time to wrap up the business. Also, the struggle, the grind and the lack of capital are also the reasons why many entrepreneurs and start-ups decide to quit. This might be because of poor decisions and research about the market. If you are unsure about your decisions and if it does involve some serious risks, then it is best not to involve in those areas.
Knowing When Closing a Business (Throw in the Towel):
1. You don’t recognize yourself anymore:
The main purpose when starting out a venture or a business is to become a better version of yourself. This may happen negatively when your business starts failing and you become almost unrecognizable. This is because, in order to save your business, you unintentionally start toiling hard and start working hard, that you fail to consider your social obligations. This makes you socially inept and cause problems to your personal life.
2. It is too much handle:
When a business is failing you are bound to be subjected to stress and pressure. This can be very hard on people who have no prior experience in handling pressure or are inexperienced in damage control. Also, for a business to strive you need day to day planning and also strategy that caters to the present and future markets. Furthermore, it is necessary to expand your team as your business grows so as to handle the growing competition and handle stress and pressure. Try to take in order that you can deliver, do not try to take orders or requests that is burdensome for you and your team as it can cause a large loss for the company.
3. The excitement and thrill is gone:
Usually when a business is reaching at its end, the owner loses the thrill of working which he/she initially had. This might be because, as the business expands, the main aim is to complete the task and the employees tend to forget how to enjoy the job and this can cause errors and loss to the company. You feel very empty inside and in the end of the day, you try to complete the task against a given deadline, rather than enjoying the job. The output will also be different from your usual work. Instead of doing your job properly you are struggling to juggle between professional and personal life.
4. You are not meeting the annual capital:
Failure to meet the annual requirement is a starting indicator that your business is not doing well. Try to consider such signs as early as possible and try to counter them, if you want your nosiness to strive and survive in the competitive environment. Failure to do so will lead you to financial losses both personally and professionally and might even cause you to have a debt. Consider the inability to meet the market requirements as a red flag and take preventive measures. Accept the reality and try to slowly move away from the venture before creating a big mistake.
5. Your personal health is deteriorated:
If you find that your health is being deteriorated and that too in a fast pace, then try to reconsider if this work is worth risking your health. Being unhealthy and tired due to long hours of hard work and tasks to keep the business alive is very much different than the tiresome work that you get, when business is flourishing. Try to differentiate between these two and act accordingly. Working long hours under immense pressure and stress can lead to anxiety attacks and in the end you won’t be able to do your job properly.
Also, these kind of works can have long lasting effects on one’s psychological health and how he behaves socially in front of other people. He/she will be considered unfriendly and selfish and eventually would be left out of the social group. Also, the emotional turmoil that accompanies with this pressure is usually too much to handle along with the physical fatigue and can cause yourself and your family huge hardships and grief.
6. Mission loses its creativity and drive:
Many entrepreneurs who have thrown in the towel complained of their business loses its lustre and eventually they forget the main reason why the business was started. The employees and the owner would often feel empty and they would fall into a slump which takes time to recover. Try to take this as a danger sign and move accordingly so that you will not be subjected to any future mistakes. Whenever you feel like your business has lost its creative drive, make a room for improvement. Rekindle that drive and passion by adapting new activities and try to be happy in what you do. Try to make yourself satisfied in what you do. When you feel you have had enough, try to dissolve the company and try taking small profile jobs.
7. You love your products more than your customers:
Always consider the needs of the customer. It should always be customer before yourself. Even if you have a good idea, the target audience might not like or approve it. When such a situation happens, try to make it worthwhile for both the parties. Customer engagement is the key factor here, if you fail to deliver what the customer requires, it might end up your company losing customers and hence your business and your brand will suffer its consequence. Try to make your customer feel that they are heard and try to answer their needs and demands through your product.
8. When your key employees are missing:
The most depressing part of running a business is saying good bye to your key employees and strategists. Take it as a caution when your expert team starts dispersing and resigning from your company. When that happens, try to ask yourself some questions such as: “have I not taken care of my employees?”, “am I not paying them enough money? “Are they trying to sell me?” etc. Try to learn about the different aspects of the problem and try to solve them if you want to save your company. If it is beyond repair and correction, then it is time to call quit.
9. Sleep mode cannot be considered:
Sleep mode is a dormant state in every business or start-up, in which the business becomes inactive for a while and takes time after which it becomes active again the next season. Resuming at a later date is more beneficial than people think. It is necessary to take a break every once in a while. This relaxing and productive are for both the start-up and the employees. But as the saying goes,” no pain no gain”, you need an alternative source for income if you are considering a sleep time for your business. When it is time to stop the business, sleep mode won’t do any good since the damage has already been done. When you see this happening, it is better to stop the business than getting yourself involved in huge debts and loss.
How to Know It Is the End (Signs of Layoff):
Deciding to give it a rest is one of the hardest decisions that any entrepreneurs could make. You will feel attached to the business since it was a result of long hours of hardships, sleepless nights and personal sacrifice. These are some factors that you should consider when deciding if it is worth it:
Try to consider if there is still market for your products and services?
In this day and age where technology is getting advanced day by day, sometimes the market strategies and assumptions that you made when you launched your product may not be working anymore. You should try to assess the current trend that is happening in the market and study the needs of the customer so that you are able to upgrade your products and services and make them successful.
Is doing business still fun?
You should always ask this question when you are at a doubtful step in your career. Are you still motivated and creative driven? If you feel like you are doing business just as a priority then consider that it is the time to move on and start discovering new interests.
Is your company getting nowhere?
After a few years of launching you have not found any considerable growth in the shares and profit then you might consider changing your business proposition. This might help you to find even more successful products that might go well with the target consumer group.
Have you failed to make a profit after five years? : In actual probability, the amount of time needed for a company to make profit depends upon a lot of factors such as the type of business, the amount of customers, the output or the product and so on. But the main purpose of setting up a start-up or a business is to actually make profit. It is a good practice to establish a time frame and try to learn the growth of your company, against this time frame. If you find that your company has not even reached the minimum point for profit especially after a long time, then it is time for closing a business.
Checklist for Close of Business:
If you decide that business closing is the right decision, then there are certain steps that you should take before completely stopping it. The main purpose of such steps is that you can close the business as quickly, smoothly and cost effective as possible so that you can have enough resources and time left for venturing out into a new service.
1. Properly dissolve your corporation:
Try to make the closing a business as smooth as possible. This is necessary, if you are handling a business that contains a large group of business partners or stakeholders. The stakeholders and the partners should conduct a meeting to decide whether or not it is necessary to close the business and it should be recorded in the meeting minutes. After the proper steps has been taken, then it is the right time to properly dissolve the company, by taking care of the required rules and conditions. Failure to do so can also result in your partners and stakeholders being subjected to the debt and the losses after shutting down the company.
2. Pay off the debts:
As company is about to shutdown, it is necessary to pay off any remaining debts to the shareholders and the market before dividing the money between the members. If your company do not have enough money to pay off the debtors, then it is wise to consult with an attorney or a lawyer and take the necessary steps.
3. Try to close off the tax department:
When you had enough with the company, you should notify the tax authority that your company is no longer working and it has come to an end. This is necessary otherwise the tax authority will keep on issuing notices to pay the tax and such. Also, the company’s payroll and budget statuses should be up to date. Failure to do so, will cause large consequences to you, your company and your members.
4. Cancel business licences and permits and warrants:
Since your company is not functional anymore, it is wise to cancel out any permits or clear the pending document that is present. Try to cancel out your business and your seller license. This is a necessary process since failure in cancelling out the permit will result in the assessment of taxes from the tax department, even if your company is not functional.
Closing is not a good sign for business, certainly it might cause some sadness to the people who worked behind it, but it could also be the beginning of something new and exciting. Closing a business is tough, but it can lead to even more chances in the future.