Closing Out: How To Know When It’s Time To Shut Down Your Business

Running a successful business is no easy venture. More than 23% of private businesses fail in the US within its first year, and about 48% have closed down after only five years, per Lending Tree. There are similar signs, however, that have been present in all of them when this has happened. 

If you’re looking for the right sign to shut down your business, they may already exist within its current operations. Read on to see how these five signs may tell you that now is the best time to close everything down completely.

According to Business Insider, 82% of businesses experience cash flow problems– which is also the top reason why companies fail. Revenue is vital to keeping a business alive, and it can’t survive if monthly costs aren’t getting paid and keep adding up over time. 

If your business isn’t receiving the required revenue, consider the following additional efforts before closing the doors for good: 

• Optimize your pricing strategies
• Cut existing expenses where possible
• Pivot marketing your marketing strategies 
• Negotiate effectively 

After you’ve exercised all options, then it may be best to close down. Without revenue, you’re not only putting your overall business at risk, but also the well-being of your staff and yourself if no one can get paid.

Over 34% of entrepreneurs experience burnout and nearly 50% struggle with high stress as per Founder Reports. While it’s a major accomplishment to own and run your own business, it’s never a good idea to compromise your health during the process. Oprah Winfrey openly spoke to People in 2020 about her depressive episodes and anxiety throughout her career. Although she didn’t halt her business endeavors entirely, she utilized mindfulness activities and therapy in order to keep pursuing her career goals.  

If your health is becoming majorly impacted from the demands of your company, it may be time to sit down and decide if shutting it down will impact you more positively. 

There may come a time where your goals and aspirations no longer align with your past self, and that’s completely normal. If you no longer believe in your career pursuits, then this could cause you stress or anxiety because you’re going against what you want to achieve. 

Take a deep dive and reevaluate what your current vision in a business looks like to you. Are you able to alter your current company to realign with what you want to achieve or is it best to close it all down completely? When you take the time to ask yourself these questions, you’ll have a clearer insight on what to tackle next in your career. 

According to McKinsey Digital, only 22% of businesses in the last several years were able to scale. If your business is experiencing any of the following symptoms, then it could demonstrate that it’s not scalable for positive growth: 

• Costs are growing more quickly than revenue 
• There is too much growth too quickly 
• Staff are burnt out and leaving 
• Revenue is too inconsistent 
• You’re less profitable as you grow 

Each of the above could cause larger problems if they aren’t fixed sooner rather than later. If you’re debating on shutting your business down due to these factors, evaluate if an alternative plan can be put in place to remedy the current dilemma. 

As technology continues to improve and more companies enter the market with innovative initiatives, it can be easy to fall victim to a decrease in demand for your products. 

Kodak, for example, didn’t follow the industry’s lead in creating digital products for consumers. As a result, their products were viewed as outdated, causing the company to experience large financial struggles and massive layoffs. If there’s no demand for your business, then you may either need to pivot or shut down operations to prevent further financial strain.