Business start-ups can be exciting and if successful, it can thrive for years and bring in financial rewards. However, not all new businesses make it. Statistics say that 80% to 90% of new businesses do not make it past the first year. It is hard enough to jumpstart a business but it is harder to close one. However, there are times this is the best decision an entrepreneur can make to avoid financial problems and further losses.
Here are the signs you need to apply for a business closure:
You have not made enough sales for months.
An integral part of a business plan is projected sales. These are ballpark figures of what your company should be earning monthly and yearly for at least three years to ensure you are making profit. If by the first year, your sales have not been reaching the estimated amount, this might be the time to decide if you still want to continue your business operations.
Your overhead expenses are higher than money coming in.
In order to run your business, there are expenses to prepare for like utility bills, maintenance fees, salaries for employees and insurance, among others. Whether your company or establishment is closed for a week for renovation or repairs, you still have to pay your workers and take care of other costs to run the company. If you have a restaurant or coffee shop and there are no diners coming in, you still have to pay for deliveries of suppliers and keep the store open. Unless customers will go there to eat, you will be losing money. This can be a sign to end your business.
You and your business partners do not have time to run it.
Owning a business needs time and dedication. It might be that you have the money for a business start-up and friends who have also invested in it. However, if none of you will be there to check on it and just rely on your employees and accountant to update you during monthly meetings, you and your partners might just be surprised one day that the business is on downward spiral.
If these signs present themselves to you, it might be best to sell your business while you can still profit from it or apply for closure as soon as possible. It’s more expensive to pay taxes, wages and rental if no sales are being made.