When most people own and run their small business, they typically think of them as their baby. They started their business from scratch and have watched it grow into what it is today. And when your business is thriving and successful, you should definitely not be afraid to show off your marvelous baby to the entire world, because you worked hard to make it into the success it is today. However, many businesses do not ultimately fall into this camp, and in reality, should be terminated before things get worse.
Now most business-owners realize that you need to spend money before you start making money. So when your business is effectively losing money over the course of the first few months, most entrepreneurs don’t even bat an eye, because they know that such is to be expected. Many businesses even lose money for a year or more before starting to turn a profit. However, when that timeframe starts to fall along the lines of multiple years without going into the black, then that is definitely something that the business owner should be keenly aware of.
And keep in mind that revenue is not the same as profit. So even if your business is making even $100,000 in revenue each year, if it costs $110,000 each year to run the business, then you are operating at a loss. While it may feel good knowing that you are earning $100,000 in sales, the bigger picture ultimately shows that you are still losing money overall.
Now for all of the people running businesses that are operating at a loss after multiple years, whether they are high-revenue businesses or just businesses that haven’t been able to get off the ground in all that time, it is time to take a long hard look at the state of your business. That analogy used previously about people viewing their businesses as their baby is none more applicable than it is here. Because the truth of the matter is that most people do not want to criticize their business or think that their business is a failure. Rather than take an honest and objective approach to their business, they will instead make excuses about why the business is not successful yet. So many unsuccessful businesses continue to operate, simply because the owner believes that if he or she just gave it another few months, it would start turning the corner. And when those few months pass by, they think the same thing again, creating an endless cycle where the business owner continues to pump money into their business with the hope that it will eventually end well for them.
However, the longer you cling to your failing business, the more it will hurt later on. Not just from a financial perspective, but from an emotional one as well. With every additional day financially and emotionally invested in your business, the sting will be that much greater when you ultimately decide to call it quits, either due the realization that the business was not ever going to be a success, or due to the much more likely scenario of running out of funds.
Not every business will be successful. That’s just the nature of business in general. And even if you feel like you have a great idea, it is important to realize that the market ultimately decides what a great business idea is, not your own personal love of the idea. So rather than cling to a bad business idea, have the strength to objectively look at your business’ prospects and terminate the business if necessary. And keep in mind that even if that particular business is over, the lessons learned will inevitably help you out on your next business, hopefully helping to turn that one into a massive success!