In the last 10 years, I have been asked the question “Should I still persist in my business?” a couple of thousand times. Having participated directly in the startup of many businesses, both in the UK and overseas – and indirectly, in another hundreds more around the world – my opinion is that there is no right or wrong answer to this question. The vast majority of business professionals who write about businesses prefer to talk about how to set up and grow a business rather than when to give up.
Closing a business at the right time avoids the creation of more problems and can also save you a lot of time, energy and money. That’s money you could use to fund your next business idea. Most of the business people I know did not succeed in their first business idea. As an entrepreneur, you shouldn’t feel beaten and disappointed because you haven’t tried and persisted enough. Some business models take longer than others to grow. To be a business person you need to maintain your optimism and a positive mindset. It is not easy to control your energy level. There will be times when you’ll feel like the loneliest individual on the planet. Some people I know gave up on their businesses because they did not know what the journey would be like before they started. In my opinion, they gave up prematurely and did not persist enough. In business, if you are not ready for a prolonged fight, don’t go into the ring.
When deciding if you should persist or not, first understand that your business might not be working for two different reasons. The first is the individuals behind the business. The second reason is the business model. Ask yourself: Would you be happy and satisfied if your business was a success now? Would you be happier if your business was making a profit now?
You need to clearly separate what you want as an individual and what you expect from your business. I have seen many businesses fail because the founder persisted in a business which was not what he expected. Cases where the business model he set up did not inspire him, or give him a reason to wake up and work in his business every day.
In some cases, the circumstances of the business founders also change, or their personal goals change because of a new personal situation. I have seen business founders who only realized what they wanted to do with their lives once they’d already started a business. There’s nothing wrong with that. In my opinion, there is a misconception in the world around us, which says that the only way you can be happy and successful is by owning your own business. Worse still, that you can’t be a successful individual if you work for somebody else. This is ridiculous. You can also be happy being a good employee and working for somebody else.
Once we’ve established that there is nothing wrong with the business founder, my next target would be the other individuals working with them. I would always start with the business partner. Do you have business partners? Are you happy to work with them? If the answer is no, you need to act as soon as possible. Be courageous and resolve this conflict as soon as you can. In my opinion, the first cause of business failure is the business pilot (you – the individual behind the business) and the second reason is the co-pilot (your business partner). Happy that there’s nothing wrong with you or your business partner? Then let’s move on to the business model.
We need to understand what is not working in your business model before we can conclude if you should persist in your business. Let me help you with a few questions I usually ask my clients. I always divide my client’s business analysis into 5 different areas: your numbers, your team, your process, your product and your promotion.
Let me give you a sample of a few questions I usually ask my clients:
Your numbers:
1) Is your company generating enough sales?
2) Are your company sales increasing or decreasing? Perhaps keeping the same level?
3) Are your company sales increasing too slowly? Perhaps to quickly?
4) Is your company generating enough gross profit?
5) Is your company making a profit?
6) Has your company has accumulated profits or losses? If so, how much?
7) How are your accounts receivable and payable terms?
8) Does your business suffer from seasonality? How many months? How does seasonality affects your business?
9) How much was the total money you invested in your business?
10) Do you have external investors? If yes, how is your relationship with them?
11) Does the business have any business loan or other kind of finance?
12) Is your business suffering from cash flow problems?
13) Do you take too much money out of the business for personal use?
14) Do you have a salary even though the business is making a loss?
15) Do you have sales targets?
16) Do you know your break-even point?
17) Do you know the gross profit for each individual, product or service?
Your team
1) Are you happy with your employees?
2) Is there anyone you would like to fire but you don’t have the courage?
3) Do you believe your employees are happy to have you as a leader?
4) Are the responsibilities and tasks of everyone in your company clear?
5) Do you pay your employees the market average?
6) Do you communicate properly with your employees?
7) Are your employees overworking?
8) Do you have enough experience into your sector? Does your team have enough experience in your sector?
9) Do you think you are a good leader?
10) Are your employees committed to the company?
Your Product
1) Do you believe that you are selling a good product or service to the marketplace?
2) How do you know if the product you are selling is good or not?
3) Do you think you are selling your product at a reasonable price?
4) What is the price of your competitors’ products?
5) Does technology affect your product?
6) Do you know who your ideal client is? Do you know how to describe them in detail?
7) Do you think you are selling your product to the right sort of clients?
8) Does your product stand out from the others in any way?
9) Are you trying to sell your products in too many ways, or are you using too many sales strategies? Example (B2C, B2B)
10) Is there focus in the sales strategy?
11) Do you sell too many product or services? Do you know which products sell the most?
Your process
1) Are you delivering your product in the most efficient way?
2) Are you delivering your product in the same ways as your competitors?
3) Do you need deliver your product? How efficient is your delivery method? How do you compare with other companies?
4) If you are manufacturing a product, do you review the manufacturing process quite often?
5) Do you keep process quality control?
Your promotion
1) Do you communicate often with your clients?
2) Which marketing methods are you using now? Do they work? How do you know if they work?
3) Do you ask your clients for referrals?
4) Do you ask your clients to give you feedback?
5) Do you know who your best clients are? Do you focus your time into your best clients?
6) Do you focus your sales strategy into your best products?
7) Do you have a story behind your business? Are you selling this story?
8) Do you have a face behind the business? Are you showing this person to the clients often enough?
9) Is it clear who is behind your business?
10) Are you well known as a specialist in what you do?
11) Do you write free content to your clients and potential clients?
12) Can you clearly show your clients the level of energy that you are investing into your business?
13) Do you call your clients and ask them what you can do better to best serve them?
After answering all the questions above, we will be able to understand the reason your business is not working as you expected. Once we understand the real reason, we can advise if there is any way to fix or improve the business. The problem we usually face is that some actions take longer than others, and in some circumstances the founders will need to be ready to invest more money. Without this investment, the probability of reversing the current business situation decreases. This is when, as a decision maker, you should ask yourself: “Should I invest another penny and try a different plan of action?” or: “Should I allocate more time and energy into this business?”
In my opinion it all depends upon three factors:
1) How long will it take to change the situation?
2) Can I work the extra months or years to change the situation?
3) How much money can the business make once the situation changes?
Remember, the best decisions will come from detailed analysis of your company through these questions, and not from decisions based on emotion or feeling.
If you have any questions, please send me an email [email protected]
