A business of your own is like a child of your own. You've conceived it as a business idea, sought financiers for it and started it off from scratch, breathed life into it, seen it grow from an idea to an operational, dynamic business. It represents a part of you. The business is a reflection of your own personality. It is not a surprise then, that even the remote thought of closing your home business doesn't inspire any more thoughts in that direction.
It is important, however, to consider that action in certain conditions. Despite all the natural instincts to ignore this option, there are circumstances which should involve the consideration of the closure of your home-based business as an option.
If you are reading this article, then it means that the option of a possible closure is present in your mind. This is a good step towards an objective consideration of whether it is time to close the home-based business.
So when is a good time to close one's home-based business?
- Too deep in debt: A business that has been overburdened by debt will have its profits disappearing just to service the debt. Recognize a ‘crisis' situation when the only way to move forward is by accessing your 401k, asset disposal, etc.
- Extreme and chronic cash flow situation: Whatever money you are pumping into the business fails to generate enough inflow. The market size or demand is just not enough to sustain the business. The business has to generate enough revenue in real terms for it to survive in the long run.
- There is no more money forthcoming, and lines of credit have been exhausted or are closed.
- The investment of time and effort is not giving proper returns: You are spending the same or more time into your business as when it was conceived, with no parallel growth in revenue or sales. The returns are not increasing or are going down, despite the same or increased spenditure of time and effort.
- There are facts staring you in the face and your Pride or Ego is standing in the way.
- Slow turnover of inventory: Slower movement of your products from the shelves indicates fewer sales and therefore less money coming in, and thus the vicious cycle tightens.
- Personal skills are a crucial part of the business, and you are now physically unable to continue involvement in the business due to ill health. Our personal participation may be crucial to the continued success of the enterprise, and since that no longer is possible due to personal reasons, the business momentum will definitely slow down.
- Unfavorable economic climate: This will affect not just your organization, but all those engaged in business. Your organization, being small, may not be able to withstand such downturns like some others, especially if you haven't seen it coming.
- Issues in payroll when there is deferment of disbursal of salaries, even if it's the proprietor's own, is an indication of business ill health.
- The ‘fun quotient' is non-existent: The zing is not there anymore as it used to be in the initial stages, and you don't feel the same level of involvement in the business or its vision.
These are a few general symptoms of a business indicating closure as a better option. Regular monitoring of your finance situation and all the above indicators will certainly highlight any problem situation as it develops. You will then be able to take constructive steps towards saving the business and averting such an eventuality.