The Tough Decision: When to Close Your Business

In case you didn't know, I write several short posts like this each week on Instagram - check them out @diegofooter.

Let's talk about the elephant in the room: knowing when to pull the plug on your business. Yeah, it's about as fun as a root canal, but sometimes, closing shop isn't failing; it's making a smart, tough decision.

When might you want to call it quits?

These reasons are very personal and tie closely to your context. I can make a case in any of these situations for going in either direction - closing or not closing. There are no correct answers.

Personal Reasons:

You're just not feeling it anymore. Life changes. We change. It happens.
The work sucks, and you can't outsource it. Why torture yourself?
Success looks like a grueling uphill battle. Sometimes, it's okay to say, "Nah, not worth it."
It's messing with your health or relationships. No business is worth that.
A better opportunity comes knocking. You're not a tree, so move if you want to!

Business/Financial Reasons:

Your business is the definition of "meh." Not winning, not losing, just existing.
You're tired of dumping money into a black hole.
It's proven to be a money loser, and you can't fix it.
The opportunity has sailed, and you missed the boat or already got all you can out of it.
Turns out you kind of suck at this. It happens to the best of us.
Debt's piling up faster than you can say "bankruptcy."

World Events:

Mother Nature or global crises decide to play hardball, making operating very difficult—COVID, tornadoes, hurricanes, fires.
Laws change, and regulations change. Adapting could be cost-prohibitive.
Your supply chain looks like a game of Jenga... mid-collapse. You can no longer get what you need at the quality you need.

Now, don't keep a business alive because:

You're afraid of looking like a failure. Newsflash: if it's not working, you're already failing.
You think throwing more money at it will help. Spoiler: it probably won't.
You're being stubbornly optimistic in the face of hard data.
You've already spent so much (hello, sunk cost fallacy!).
You're holding out for a miracle cure. It doesn't exist.

Remember, knowing your "why" is crucial. If your business no longer fits that "why," it might be time to peace out.

Whenever you start a business, you should know exactly why you are doing it. You should think about this and write it down up front. You should do this as a family or with all relevant decision-makers involved, like business partners. If the business no longer fulfills the why, then move on.

It's essential to revisit your why over time because we change, and life changes. Adapting your why to these changes is perfectly fine, but you want to adapt it in calm times when you aren't overly emotional in either direction.

If you don't have a why, then you are just working and moving aimlessly in a direction. Small businesses are highly personal and driven by our why. Know yours.

Anything missing? What's your take? Have you ever had to make the tough call to close up shop? Share your stories.

Listen to the long version of this letter on Carrot Cashflow.

Diego

P.S. If this will resonate with someone, please share it.