How do you know when the time is right to sell or close your small business?

DCF 1.0

Deciding to close or sell on your business is a tough move. It’s likely that you’ve dedicated a lot of time and effort to building up your business and if you’re looking to sell maybe it has been a success. If not, the blow will be even harder.

Selling your Business

Is your business fun anymore? If you’re not getting any enjoyment out of your business but it’s tootling along just fine then perhaps you should consider selling out. If you’re not motivated then it won’t be long before things start to slip. So perhaps you should consider finding a buyer before it’s too late and things are already turning sour. If you spend the majority of your time unhappy to be at work then this is something you should really consider.

Closing your Business

There are many more factors to consider when you are thinking about closing your business. It’s not just about how you feel personally; it’s about the way the business is working. You could be enjoying every day you work but if you’re making a huge loss, it simply isn’t worth it. There are some key questions to ask yourself.

  • Is there still a market?

Is your market still alive and kicking or have you reached its endpoint? Sometimes the market conditions change and you do need to think about whether you still have a place in it. Look at your current sales and compare them to previous years, and this should give you an indication of where you stand. Constantly assess market trends to see if you’re still relevant and needed.

  • Are you making any profit?

The golden rule is that if you reach year five without profit then it’s probably time to cut your losses. The business isn’t viable and although profitability is judged differently in different sectors, you do need to be realistic. Five years without profit doesn’t show your business in a good light and you could theoretically keep setting yourself larger goals but ultimately you’re unlikely to succeed.

  • Are your clients paying on time?

If clients owe you money then that puts you even further on the back foot. If collection efforts aren’t working or you aren’t getting back your costs in full then your business is unlikely to be running to profit and as the previous point suggests, is unlikely to be a viable long-term option. Intuit offer a range of software which can aid your business.

  • Can you cut costs?

In some instances cutting costs is enough to keep a business afloat. It might seem harsh, but if you’re employing too many staff then redundancy may be the answer. Alternatively, you could think about other ways of lowering the wage bill through shorter working hours. Small changes can be enough. It doesn’t just include staffing; you can also look at the rental costs of your premises, travel expenses and the value of ongoing business contracts. Anything you can tighten up could make all the difference. If you’re already running on empty, it may be time to call it quits.

No one wants to accept their business doesn’t work but sometimes knowing when to call it a day is the bravest decision any smart business owner can make.


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