Lockdowns made running a business extremely difficult and many small companies and private entrepreneurs didn’t make it. More yet will fail during this global recession. In fact, about 48% of small business owners are afraid they’ll close for good.
But there is a big difference between being afraid of closing and being forced to close.
Of course, today you can run a business from home, so lockdowns and restrictions aren’t so devastating for some. However, there are many other factors that affect a business. You must consider those when you decide whether this venture has a chance of success in the long term. Quite often owners try to prolong the life of their companies getting deep into debt. Ultimately, this only harms you in the long run and reduces your chances of starting over.
So, if you run one of the millions of struggling businesses during this recession, you should think hard. Perhaps, it is truly better to close now and open a new business. Here are 4 signs you should close your business now.
#1: You Aren’t Invested in It Emotionally and Mentally
It’s not only cash that matters for small business survival. Many such ventures strive on enthusiasm and motivation of owners and employees. Therefore, if you’ve stopped caring about your business, it might be best to let it go.
Note that this might be caused by depression, which is on the rise right now. In this case, it might seem that you should keep the business anyway. However, bear in mind that this condition takes a long time to treat with any success. And additional stress from being responsible for a struggling business can hinder your recovery.
Simply put, no matter what your reason for not caring is, it’s best to stop the business project when it happened. In this state, you won’t be able to run it successfully anyway.
#2: You Are Unwilling (or Unable) to Take Big Risks
It takes a special kind of person to take great risks in anything. Of course, starting a business is always a risk. However, no one can argue that during a crisis the level of it skyrockets.
If you are too fearful and indecisive now, you might make mistakes or miss your chances. Ultimately, this might cause your business to fail even if its situation isn’t desperate.
You also need to understand that sometimes one can’t afford to take extreme risks. For example, if you have a lot of debt or a family to support, you need to think if risking is worth it. In essence, you need to imagine a situation where you’ve gambled and lost anyway. If there is no chance for you to recover, perhaps this risk is just too much.
#3: The World Has Changed Too Much
The COVID-19 pandemic might end, but the effects of it will last. It changed the world forever in some ways. Sadly, this means that some businesses have become obsolete. If this is what happened to yours, closing and opening something new is the best strategy.
Another option is to do a complete business revamp. This could work for well-established brands. However, this can also be both expensive and difficult. Starting from a clean slate might be more cost-efficient in the long run.
#4: Your Business Has Turned Into a Sinkhole
Sometimes these things just happen, especially during a recession. If your company is taking more money than it makes and this has been going for a while, you need to accept defeat. Sunk hole bias often prevents people from stopping when the time is right, which only makes it worse.
This means that people are often trying to get back their investment as they are unwilling to accept the fact that they’ve lost so much on a deadbeat business.
This is a harsh truth to accept. But you need to understand that if you don’t do this now, you will only lose more. It’s a good time to consult a financial planning expert and get a thorough business audition. If it turns out to be a losing battle, there is no shame in moving on.
Answer yourself how much are you willing to invest before you finally refuse to waste your money on a hopeless case? Think about your future and all the opportunities you are losing because you spend your money on something that won’t return it.
If you are having thoughts like this, it’s definitely time to cut your losses.
