Herman School of Business
Know When To Fold Them...
In the last posting we talked of a shop owner who is questioning whether to stay or go? This posting will not specifically discuss her shop…but rather talk about what business owners must consider when pulling the plug becomes a possibility.
How do you know when it is time to go?
If the thought even enters your mind as a business owner it is at least time to look into your business and find out why that thought has found its way into your cosmos. When you start to question why you are there, and how you can make it going forward, and what to do if you do need to get out…it is time for a reality check.
These thoughts seldom come to the business owner drowning in customers and cash. Nor do they come when your firm has just landed the biggest account, or recently cashed a check from the largest sale you ever made. Let’s face it, these thoughts are for the lost, the floundering, the over-worked and undercapitalized owners. These thoughts creep in when the family starts to remind you that they are second place to the time jailer your business has become…and did they mention that the cash shortage around the house seems to have something to do with your company? The one they have no say in, but pay dearly for?
OK, these are the emotional pulls on you. Stay strong. Bend but don’t break. These are not the reasons to run away from what was your dream not long ago. Although it now may have turned into a nightmare…it ain’t over yet.
Business is about controlling your own destiny. Owning a business is about being in charge, about calling your own shots…and oh yeah…it’s about the money. Remember, you started this whole thing because of the money that would come rolling in when you made it work. And you surely didn’t expect it to start rolling in right away did you? Unfortunately most owners never give themselves enough time to succeed. So, let’s talk some facts about the money.
Look at what you owe right now. All of it. Every freaking penny of it. Not just the original loan, but the vendors bills and the taxes, and the wages, and the rent, and the credit card debt you knew would put you over the top. Wow, the hole is deep isn’t it? So what…that’s just the downside. What about the value of what you have?
Value the inventory, look at the store fixtures, the office furniture, the manufacturing equipment, the customer base you have built. Add it up. Now look at what you are doing and why it isn’t working. Is it the right merchandise you have, is there enough of it? When your customers leave do they leave empty-handed because you didn’t have what they want? Is that open space in your business available for more stuff to sell? Have you really done all you can to make it work? Only when you can say that there is no more cash to infuse…and that even if you had it that wouldn’t make the business work. Only when you say you can’t find more customers and the ones you have aren’t buying enough. Only when a partner with new ideas or some cash wouldn’t help. Only when you have done all you can do. Only then can you throw in the towel. Or you will regret it.
Bring in someone to share the financial and physical load. Give them an option to buy you out in three years. It may be better than walking away now with nothing but debt. You know what the entry obstacles are to owning a business? Almost nothing. People start companies all the time on a wing and a prayer. It isn’t until later they realize how much it might cost them. Starting is easy. Getting out requires real work.
- Posted: 9 May 2008
- Comments: 0
- Category: Business failure
add a comment