When to Close Your Company?
For most people, their company is their newborn, an infant born of tremendous hardships, months of care and preparation, and a series of regular tests. So naturally, a creator's love and affection for their business have no end. For this reason, they miss significant red signals regarding their endeavor, indicating mishap and loss. Ignorance of such signs would only set the business on a downward spiral that would not benefit its founders, investors, or shareholders. Therefore, it is crucial to spot the moment where your company can be deemed as a lost cause where it reaches a point beyond repair. This realization can protect you from further setbacks and save the labor engaged in this bootless errand.
Here we have listed four signs that indicate it is time to close down your company and stop rummaging your heads over a futile venture.
Not Making Any Profits
Not being able to make any profits in your first financial year can be attributed to the lack of expertise in the field. But if the profits are nowhere to be seen after a couple of financial years, then it is a sign that the niche you are working on is not very profitable. It is implausible to proceed with the business in such a situation. Conducting thorough market research and pivoting your focus on a more profitable niche might be the long-term solution here.
Putting in More Money Than You Are Making
If your profit margins tend to be at a new all-time low every year, even when you have spent a significant amount of funds trying to skyrocket those profits, it is a sign that your business is not functioning efficiently. Increasing your fixed and variable costs without any remarkable increase in sales to the point of personal bankruptcy does not scream long-term at all. Even if putting your financial independence at risk cannot produce fruitful results, the company is not worth investing in and should be shut down completely.
Frequent migraines, increased hair, and weight loss through stress and sleepless nights may all occur at some point, if not all, due to bumps in the business. However, suppose you start undergoing any of the above-stated scenarios. In that case, it is integral to note that the "bumps" in your industry are not the typical hurdles one goes through but pressing obstructions that will only increase with time. In times like this, quitting the company would be the best option for a healthier life.
Your Mission Is No Longer Visible
Every company has a foundation over which it is built, a meaning behind the brand that makes it stand out. The creator's vision is to keep that meaning alive in every step taken to take the business to the next level. However, if that meaning is lost or completely forgotten as the brand progresses, it is wise to close down the company. Like Jeff Bezos says, "A brand for a company is like a reputation for the person." How can a person be identified without his reputation or a company once it loses its mission?