can be a difficult decision to close a small business, but in some
circumstances, it is a decision that has to be made. The following are
five signs that it may be time to close your small business.
1. You are losing money, and the amount you are losing is steadily increasing.
is not uncommon for businesses to have slow periods or to occasionally
take a loss, but if the amount that you are losing is increasing it may
be time to look over your business strategy and determine if it is
possible to lower your losses. If you cannot find a way to lower or stop
your losses, your business will eventually become valueless.
2. Your sales have been continually slowing.
are several ways a business can manage its debts and maintain
operations when it is not making many sales, but if you are seeing your
sales steadily decrease, that can be a sign that your business is
slowing down. You will need to determine if your slowdown is temporary
or the beginning of the end for your business.
3. You have an increasing debt-to-asset ratio.
high debt-to-asset ratio does not necessarily signify the end of a
business, and some industries tend to have high debt-to-asset ratios. If
your debt-to asset ratio is high for your industry, it can signify a
problem. A high debt-to-asset ratio can affect the amount of flexibility
your business has and lower your ability to gain credit, which can lead
to the end of a business.
4. You cannot get a line of credit for your business.
will often extend a line of credit to a small business owner, but if
they feel there are problems with the business, they may stop the line
of credit. Businesses generally need money to maintain equipment, to pay
employees, and to purchase inventory. Even if you are able to pay your
expenses without credit, you may not be capable of improving your
business or covering emergency situations if they arise.
5. You no longer enjoy what you are doing.
is not a way to place a monetary value on happiness, but the way you
feel about what you are doing can affect how you perform mentally and
physically. When the thought of doing things for your business depresses
you, it may be time to walk away.