How Long in Years Should I Wait Before I Close Down an Unprofitable Business - page 10.

Bushdark

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Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

How long in years should I go before I give up and close down a business that is unprofitable?

I was listening to a podcast where Kelvin O'Neal¹ was featured. He said, "If you are not making money after 36months(3 years), you've gotta take a behind the barn and shoot it. It's just a hobby. It's not a business."

According to him, "people can get so stuck on a bad idea that they just keep thinking that if I keep working on it, it's going to fix itself. It doesn't fix itself. It was put on your journey to teach you, what not to do."

- To what extent do you agree or disagree with this assertion ?

-Have you had a business that even though it wasn't profitable in the first three (3) years, then it kicked off to bring in good returns in the fourth (4th) year?

1 https://www.instagram.com/reel/CqVbhNCt0yF/?igshid=YmMyMTA2M2Y=

I still don't get why I would have to keep doing a business for many months and I will not think of fixing it 5o adding some tips that would make it work. If we keep doing a business and we are not getting any profits at all and in the future we don't know what Will be our fate then we need to think twice of the possible way that will make it work or better still we look for something else we can do that will make bring profits to us. We can collaborate with people in business to minimize our expenses and maximize our profits. This is business and the sole reason why we are into businesses is to make profits.

Fortify

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Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

How long in years should I go before I give up and close down a business that is unprofitable?

I was listening to a podcast where Kelvin O'Neal¹ was featured. He said, "If you are not making money after 36months(3 years), you've gotta take a behind the barn and shoot it. It's just a hobby. It's not a business."

According to him, "people can get so stuck on a bad idea that they just keep thinking that if I keep working on it, it's going to fix itself. It doesn't fix itself. It was put on your journey to teach you, what not to do."

- To what extent do you agree or disagree with this assertion ?

-Have you had a business that even though it wasn't profitable in the first three (3) years, then it kicked off to bring in good returns in the fourth (4th) year?

1 https://www.instagram.com/reel/CqVbhNCt0yF/?igshid=YmMyMTA2M2Y=

The answer to this can vary wildly and also depends on the personal circumstances of the founders of the company. For example, if it is a fairly low cost exercise and the owner is the son of some rich millionaire, then they might be able to keep it going - just under making a profit each year out of sheer perseverance or having it as a sort of side project. However if you are an owner that relies on it to make an income in order to pay your personal bills, then you have a much shorter runway to use. You should be able to tell within the first couple years whether it has a long term future, because you can see peaks and troughs in that time. However Amazon went for a long time as an "unprofitable" business as it sought to claim market share and is now one of the biggest companies in the world.

vv181

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Each type of business and in what sector it relies upon makes a difference about how long should you shut it down. Three years is a rough number, he does not even mention what type of business or maybe you did not put up detailed context about what he is saying.

Ideally, the one who decides and knows how the business operates should be able to forecast the longevity and profitability of their own business. When things do not hit the target, many many times, it clearly shows that something is wrong. Each time it did not hit a target, it is assumed that each take should have a different execution or goals, and three years is a long time to realize where the problem is.

Jody.Drummer

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3 years is not a short time to do business, but in the business world 3 years will be a short time. We can't conclude that in those 3 years we really don't have the expertise or we run a bad idea, because we have to see what's wrong with all of that so that our business doesn't go well.
There are some businesses that may be difficult to develop and take longer than what happened. And there are also some businesses that only take a short time to grow bigger. So we can generalize all types of businesses because there are fundamental differences.

CarnagexD

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You can't do the same thing you are doing all over again and just wait for years to have return. A small business that continuously improves its business process is less likely to get bankrupt than the one who started huge and just keeps on doing the same thing. Ideally, if you had a lost in your initial year of operation, you can continue up to three years provided, that you still have the working capital to continue. But there is no such timeframe for closing down an unprofitable business, as long as you have faith in what you are doing, you can continue.

Personally, I will start the business related to book publishing if I have the money. Regardless of how unprofitable it will be in the next years, I'll continue doing it because I love it and because I have the money. But practically speaking, people start business to earn profit, so if it no longer earns profit, you have to close it.

Zlantann

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Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

How long in years should I go before I give up and close down a business that is unprofitable?

I was listening to a podcast where Kelvin O'Neal¹ was featured. He said, "If you are not making money after 36months(3 years), you've gotta take a behind the barn and shoot it. It's just a hobby. It's not a business."

According to him, "people can get so stuck on a bad idea that they just keep thinking that if I keep working on it, it's going to fix itself. It doesn't fix itself. It was put on your journey to teach you, what not to do."

- To what extent do you agree or disagree with this assertion ?

-Have you had a business that even though it wasn't profitable in the first three (3) years, then it kicked off to bring in good returns in the fourth (4th) year?

1 https://www.instagram.com/reel/CqVbhNCt0yF/?igshid=YmMyMTA2M2Y=

The information that these motivational speakers or economists give are not 100% true. Some businesses need more than 3 years to become profitable. Profit-making might not be the only indicator that a business is doing well. It takes a long time for businesses to outsmart competitors and grab more market share. So if you observe that your business is gradually and consistently controlling more markets, it's not a good time to quit because in a few years, profit will start flowing in.

A business could also serve as a foundation for a future enterprise. I can start a rubber plantation because I want to invest in plastic household materials in the future. So even when I am not making any gain from my rubber business, I might make my profit when I establish my future plastic industry. We understand that different type of businesses has their maturity stage.

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I agree with the statement about quitting after 3 years of not making any money and maybe the sooner you stop, the better because you can reduce the amount you lose. Usually, someone starting a business will evaluate his business in the first 3 months and check which ones need improvement so he can think about continuing his business, increasing his capital, or even stopping business. During the first 3 to 6 months or the first 1 year, he should understand how his business develops and think about what to do. And before the business is not running at all or even unprofitable, he can close it to avoid losses that could be even greater if he continues. The biggest loss is usually the daily operational costs, so the business cannot generate the profit it wants.

If, in the first year, he can see the development of his business, he can add capital to spread his business and develop it to be bigger so that the profits are also increasing. But if during that 1 year, he suffered more losses and didn't make any significant changes after the first 6 months, he could think about closing his business.

Pokapoka124

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I agree with what he said. You cannot expect much profits in the first year of starting a new business because you’re still building your reputation and growing your customer base. If you work hard, make the mistakes and find solutions to them in the first year, it’s expected that the sales will increase in the second year. Personally I would give my business three years before shutting it down.

Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

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It’s crazy that the comments on the post are all about crypto investments.

noorman0

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It will depend on the scale of the business, the smaller the business scale will shorten the evaluation period, it can be monthly, weekly or just daily. Consideration will require some evaluation results, and it's best when choosing to maintain a business for a certain time also think about the capital that you can afford to spend even more. Because after all it will be a waste of money if it fails in the end.

cabron

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If it's not profitable after 6 months I would already quit and concludes the feasibility study was incorrect.
I was in the same situation back in 2016 when I set up a business which I thought because there is foot traffic in the commercial area the business will not fail. I didn't count that the mall manager will also allow business competitors to come rent closer to my business.

Even if I its a hobby that I enjoy dealing with the stuff I sell, I need funds to survive. 3 years will be too long.

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Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

How long in years should I go before I give up and close down a business that is unprofitable?

I wouldn’t allow my business to become unprofitable for a year because it will just continue declining when I continue that phase. If ever it comes that way, I will give it another year for improvement on marketing sales then see if business can be recovered. I think 3 years is too long to wait for a business to close down due to the increasing operating cost that will put you on a huge debt.

2 years max I guess for me.

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Quote from: bitzizzix on March 31, 2023, 10:16:03 AM

...//...::
. The way to do business is not always the same, there are times when by changing business fields, it turns out that that is where fortune awaits.

I don't know if fortune will come to him in the next business but perhaps what many don't know is that the average business time exists (close) and it doesn't mean failure if not that it simply wasn't established or worked.

The OP's question is something you only know when it happens. It's like asking: when they throw me the life preserver, when am I drowning or after?

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Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

How long in years should I go before I give up and close down a business that is unprofitable?

I was listening to a podcast where Kelvin O'Neal¹ was featured. He said, "If you are not making money after 36months(3 years), you've gotta take a behind the barn and shoot it. It's just a hobby. It's not a business."

According to him, "people can get so stuck on a bad idea that they just keep thinking that if I keep working on it, it's going to fix itself. It doesn't fix itself. It was put on your journey to teach you, what not to do."

- To what extent do you agree or disagree with this assertion ?

-Have you had a business that even though it wasn't profitable in the first three (3) years, then it kicked off to bring in good returns in the fourth (4th) year?

1 https://www.instagram.com/reel/CqVbhNCt0yF/?igshid=YmMyMTA2M2Y=

One business coach told me the following - you do not need to register a legal entity before you receive the first income from this type of entrepreneurial activity.

Only the first money you receive from a client indicates that you have organized a successful business.

This is due to the fact that business is exclusively an activity aimed at making a profit. Ideally, when you receive an advance payment from a client. This is evidence that you are trusted.

Trust is a very important factor. If your business has been unprofitable for three years (this is a very long time), in my opinion, it needs to be liquidated urgently.

bitzizzix

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Doing business is not as easy as we imagine, and even though the business we run is the same as a hobby because a hobby business like ours needs consumers, not consumers who need us, and that doesn't guarantee it will be successful.
and what you have to do before doing business is find out what is needed or what is not available in the location and also try it with good management, and try small things to see how it goes.

and if your business has been unprofitable for a long time, there are times when we are too fed up with our stagnant business. And it never hurts to seek and try other opportunities. The way to do business is not always the same, there are times when by changing business fields, it turns out that that is where fortune awaits.

DrBeer

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Quote from: Davidvictorson on March 31, 2023, 08:22:34 AM

How long in years should I go before I give up and close down a business that is unprofitable?

I was listening to a podcast where Kelvin O'Neal¹ was featured. He said, "If you are not making money after 36months(3 years), you've gotta take a behind the barn and shoot it. It's just a hobby. It's not a business."

According to him, "people can get so stuck on a bad idea that they just keep thinking that if I keep working on it, it's going to fix itself. It doesn't fix itself. It was put on your journey to teach you, what not to do."

- To what extent do you agree or disagree with this assertion ?

-Have you had a business that even though it wasn't profitable in the first three (3) years, then it kicked off to bring in good returns in the fourth (4th) year?

1 https://www.instagram.com/reel/CqVbhNCt0yF/?igshid=YmMyMTA2M2Y=

The question is rhetorical!
Situations are different. It all depends on the real reasons for the unprofitability of the business, and a real assessment of the prospects.

A business can be really "calculated" incorrectly, all the nuances, market conditions, purchasing power, etc. are not taken into account. Here it is necessary to make a willful decision, and simply close the business, or sell it to someone.

Maybe - the business is really good, but its time has not yet come. Then - "freeze" and wait for "your time".

There may be a situation when the business is good, and "for its time", but the situation in your country is not the most suitable - for example, as in my country - an external terrorist large-scale aggression of a neighboring country, as a result of which many were forced to either close the business, or sell it or just lose it...
In this situation, business migration to more comfortable conditions (city/region/country) is possible.

And to sit and wait is only to increase your costs ....

AicecreaME

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For me, a unprofitable business only means that it is too common, no solid business plan, or in a wrong place. Starting a business need those in order to succeed, and you need to continuously adapt into your environment, because if not, you're probably gonna lose your profits and will end up shutting down your business. You also need to know what's wrong with your business, you don't need to shut it down after a year of being unprofitable, you just need to think that there's something wrong.

But if you think there's nothing wrong with your business, just shut it down because it won't work that way. Also think if you're suited for starting any business first, because it might not be your field of expertise.

inthelongrun

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No, I cannot wait for 3 years to finally decide to close a losing business. That's just way too long for me. Although I haven't had a business with a capital of over $20k. A few years ago, I tried to open a business with that amount as its capital, after a few months of processing the papers and attending meetings where sometimes politics are involved in a local place, I gave up before it even started.

So maybe a big capital like those rich people are starting, they just cannot simply give it up and lose all the investment. But for smaller businesses, 3 years is just way too long to suffer and the capital loss is a bit tolerable.

hugeblack

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In the market there are cycles where the activity is flourishing for a commodity and it dims. For example, in times of holidays it is easy to sell sweets, decorative tools, etc. If you fail to achieve profits that cover your losses during two market cycles, it is better to think carefully about what project you are undertaking.

The market cycle varies from one person to another and from one country to another, some of which are several times a year, some annually, and others every several years. Therefore, according to those cycles, you will determine whether you will continue or not.

Zaguru12

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According to experts the average period for a business to start yielding profit is 2 to 3years. But it all depends on the kind of business. A small scale business can be profitable in short time span because of the low start up cost whereas a larger would take time before it begins to yield profits. Competition from other businesses marketing similar products could hinder the person growths and at such the business might have to do away with profit first and build the brand.

Before considering a business to be unprofitable one most have to look at the potential of his products. Say Electric motors, they have been in the market for long but since the world hasn’t evolved fully to that area and still live in fossil fuel then this kind of business can be given future benefits of doubt. But for business in which people are moving away from its maybe because they seem traditional and the profit isn’t coming anymore then such business should be stopped.

Moreover if one has a business and it is in Tenth year or more and there’s no sign of profit and people aren’t looking to move towards that business probably due to government restrictions or policies then it is best to work away from such business

Lorence.xD

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I agree with his statement, imagine operating your business for three years without improvement, you should let go of it. Because if you're really into that business you would do something that will help for your business to boom. If its no progress then it would be consider as a hobby. However, there's a scenario where some businesses are not meant for you, therefore you can connect your hobbies to your business for example, you really like collecting shoes and you've decided to resell as a business. Then it would be easier for you to have an idea on how to run your businesses since you have a good background on how to handle shoes.

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