How Long in Years Should I Wait Before I Close Down an Unprofitable Business - page 4.

Cling18

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Quote from: Freddie Boyer on July 16, 2023, 02:34:16 AM

Quote from: Botnake on July 14, 2023, 04:29:56 PM

I guess even 3 years is already long enough. Once I’ve never seen the positive impact of my business and it never shown any sign of progress in just a year or two, then leaving it could be the best thing to do than to prolong my business while there is no sufficient amount of income that is getting in. Otherwise, I might be triggered to take loans and might end up regretting.

So, I want to ask this before continuing, have you reviewed where the mistakes and shortcomings are for each closing book at the end of the year? If there is, I think it's easy to read and immediately revise where the error lies and minimize it. If it's taken for granted, the weak point will grow and eventually jam the business you've been running. Income does not match expenses where the fixed costs you have to pay each month.

If we're noticing that we're not earning for months then we should enhance our business plan and create a more effective business strategy. We must figure out our business's mistakes and weaknesses and try to find ways to do better.
In case we've done these things and we're still not making any profit, then we better decide weather to stop or to continue. 3 years as for me would be too long and it will be a big waste of time and finances. It might lead to total bankruptcy once we wait that long.

lixer

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Quote from: nesty on July 13, 2023, 12:58:20 AM

In an average years a start up business could be profitable in 2 to 3 years time. That is right if your business is not earning within 36 months you probably shut it down or if you still want to revive it you have to change your marketing plan and assess what is wrong with you current strategy why you are not able to generate profit. That it is possible that your business is not profitable in the first 3 years then it would boom on the 4th year. That is why businessmen has a high risk tolerance in creating his own business. To be able to have a profitable business you should have a lot of patience, capital, a good marketing strategy, and also you do know your specific goal, know your customer as well.

I think that was long. Maybe if the business is slow and then other things are not that great but that's better, at least the efforts are not wasted and maybe after these periods, earning will now be easy because the business is already well known to the public and they already have improved. If we want to revive a dead business, we need to change our approach as a whole and not just in the marketing side.

Even if you become successful about it but your product is still lousy, do you think the hype will stay? No, it won't. The last thing that you said which is know your customer, reminds me of KYC online lol but yes it's important and the KYC offline is different. It is knowing what their need is and then you need to be friendly about them so that they will keep on coming back.

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Quote from: Botnake on July 14, 2023, 04:29:56 PM

I guess even 3 years is already long enough. Once I’ve never seen the positive impact of my business and it never shown any sign of progress in just a year or two, then leaving it could be the best thing to do than to prolong my business while there is no sufficient amount of income that is getting in. Otherwise, I might be triggered to take loans and might end up regretting.

So, I want to ask this before continuing, have you reviewed where the mistakes and shortcomings are for each closing book at the end of the year? If there is, I think it's easy to read and immediately revise where the error lies and minimize it. If it's taken for granted, the weak point will grow and eventually jam the business you've been running. Income does not match expenses where the fixed costs you have to pay each month.

icalical

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Quote from: sunsilk on July 15, 2023, 10:33:51 AM

Quote from: icalical on July 15, 2023, 10:11:10 AM

I think it highly depend on the industry of the business, I only have experienced two business failure. I will only tell the first one which is a culinary business, everything went bad in the first year, and the business didn't make any profit after the 9th month, and it ran out of money after 1 year (or 14 month, I forget the details) so I decided to take a loan, this culinary business is not getting better and I officially give up after 2 years and 3 months. I think the loan is a mistake and I should be just give up after 1 year and the business ran out of money. And after I was asking around to some of my colleague who has a lot more experiences in culinary business, they said that most culinary business will either last long and succeeded, or died about the first year.

It's not really advisable to take a loan to help a business that's trying to survive. It's only good to take a loan when you're into expansion and your business is already profitable. But I do understand why many owners are doing that, it's because they're believing in what they do and the business that they're establishing.

But then, if it's already too long like a year or two and then the business is still not making a profit and you're already in debt. That's the time to acknowledge everything that it's not going to work if you have done already a lot of things like trying to change the process, upscaling, changing location and other things.

Yep, lesson learned, I shouldn't have taken that loan, after I know that the business is not profitable again. But I think the main reason why I took that loan is because I still want to keep up the hope, since I already invest my money my time and my effort into the business. I don't think I could accept that all those time, money and effort will be wasted if I close the business at that time. It turn out, those loan make me waste more money, more time and more effort.

Framelover

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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=

Success stories with delayed profitability exist, but they are not the norm. While some businesses may indeed struggle in their initial years before eventually becoming successful, there is no guarantee that a profitable outcome will be achieved in the fourth year or beyond. The timeline for determining when to give up an unprofitable business depends on factors such as industry, market conditions, type of business, and efforts made to turn it around. For me, I won’t spend over three years in a non profitable business.

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Quote from: Botnake on July 14, 2023, 04:29:56 PM

I guess even 3 years is already long enough. Once I’ve never seen the positive impact of my business and it never shown any sign of progress in just a year or two, then leaving it could be the best thing to do than to prolong my business while there is no sufficient amount of income that is getting in. Otherwise, I might be triggered to take loans and might end up regretting.

A business need to be check before launching it, the factors and the enviroment if it is going to succeed in that enviroment or not, how will a business be alive for 3 years without a profit, its like one is running a business and with loss and still paying for the loss because you will have to pay for the rent, the electricity bill, and taxes, whether you are making profit or not, it is a must and it must have to be paid.
What I think any business person should when a business is not profitable after a proper business plan should make some changes after six month and if there is no any changes after another six month, then I think the owner need to dismantle the business and face the next way out, at most 2 years is enough to finalize the decision of the business profitability.

adzino

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Yeah, 3 years does sound fine to me as long as there is still "market" for your business. There might be months where your business might not do well like before. You won't be making any considerable profit due to economic situation. If you believe that the conditions are going to improve and change later, then yes, keep trying before letting it go. During those time, you can look for space where you can develop your lacking in the business. But if you think it is because the "market" is mainly dead or you have competitors that you can no longer compete with, then yes, you should stop and start focusing on something else. It would be just a waste of time and like you said, it would just become a "hobby".

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Quote from: icalical on July 15, 2023, 10:11:10 AM

I think it highly depend on the industry of the business, I only have experienced two business failure. I will only tell the first one which is a culinary business, everything went bad in the first year, and the business didn't make any profit after the 9th month, and it ran out of money after 1 year (or 14 month, I forget the details) so I decided to take a loan, this culinary business is not getting better and I officially give up after 2 years and 3 months. I think the loan is a mistake and I should be just give up after 1 year and the business ran out of money. And after I was asking around to some of my colleague who has a lot more experiences in culinary business, they said that most culinary business will either last long and succeeded, or died about the first year.

It's not really advisable to take a loan to help a business that's trying to survive. It's only good to take a loan when you're into expansion and your business is already profitable. But I do understand why many owners are doing that, it's because they're believing in what they do and the business that they're establishing.

But then, if it's already too long like a year or two and then the business is still not making a profit and you're already in debt. That's the time to acknowledge everything that it's not going to work if you have done already a lot of things like trying to change the process, upscaling, changing location and other things.

nara1892

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Quote from: DrBeer on July 15, 2023, 02:46:38 AM

I'll be honest - maintaining a loss-making business for 3 years is not a smart move. Perhaps there are businesses that were born before the public came to understand this business, and it takes 3 years to build a loyal audience. But this is the exception rather than the rule. If you take the example of an ordinary grocery store, which for 3 years does not bring profit but only losses - then there are good reasons - audience, location, assortment, ..... Sell to someone who knows how to fix and improve it. Any other steps will only increase costs, and irreversible

Currently, the world of business competition has its own technique to survive. Not a few efforts that are only 1 or 2 years old go to waste. For example, I myself have failed many times to start a clothing, screen printing, food and beverage business. If calculated only 40% of the return on capital budget does not even cover administrative and transformation costs. In cases like this the lesson I get is that management is lacking, promotion and marketing don't just go offline by posting pamphlets. Offline businesses must be able to enter the online world by using TikTok social media channels, Facebook Ads, and various types of online shops. That way there will be a significant increase in the target market that can be achieved in a balanced way.

icalical

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I think it highly depend on the industry of the business, I only have experienced two business failure. I will only tell the first one which is a culinary business, everything went bad in the first year, and the business didn't make any profit after the 9th month, and it ran out of money after 1 year (or 14 month, I forget the details) so I decided to take a loan, this culinary business is not getting better and I officially give up after 2 years and 3 months. I think the loan is a mistake and I should be just give up after 1 year and the business ran out of money. And after I was asking around to some of my colleague who has a lot more experiences in culinary business, they said that most culinary business will either last long and succeeded, or died about the first year.

Mario Yamasaki

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Many people experience difficulties when they are just starting a business, according to experts if the business can last at least 3 years then the opportunity for profit is very large, because 3 years is enough time to know the market situation, competitors, and what consumers prefer when want to use the products or services we sell.

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Quote from: umbara ardian on July 15, 2023, 06:51:58 AM

Of course, maintaining a business for a long time without achieving profitability is difficult and may lead to the decision to close.

That is why every businessman must have sufficient experience to be able to take his business forward, because not everyone can face difficult conditions and survive in situations that are not easy now. So besides having to have capital, you also have to have experience in managing that capital so that you can get more through this business.

Quote

In today's uncertain economic environment, soaring prices and numerous challenges, ensuring a profitable business is an important factor. If a business cannot make enough profits to survive, the decision to close is justified.

I would agree more if the pattern and direction were changed so that it would be more advanced, not even closed immediately. Because when a business is not progressing as desired, of course there is a cause that makes certain businesses not go according to plan. Well, in this case of course the business owner must know about it so he can change everything that is a barrier to the progress of the business.

Quote

It's important to think carefully about continuing to run your business or finding new ways to increase profitability. Sometimes developing another business plan or seeking professional help is the way to change things.

I agree more on the point of looking for new ways to make a business grow, because closing an existing business is not a very wise solution because building a business from the ground up also requires struggles that are not easy so when a business is already running, it must be able to really grow. properly maintained so that the business can survive in the long term.

khiholangkang

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Quote from: umbara ardian on July 15, 2023, 06:51:58 AM

Of course, maintaining a business for a long time without achieving profitability is difficult and may lead to the decision to close.

In today's uncertain economic environment, soaring prices and numerous challenges, ensuring a profitable business is an important factor. If a business cannot make enough profits to survive, the decision to close is justified.

It's important to think carefully about continuing to run your business or finding new ways to increase profitability. Sometimes developing another business plan or seeking professional help is the way to change things.

I think assuming like that is a failure that can be seen, as usual, surely building a business in a few years will experience losses due to several factors, one of which you mentioned, if because the problem is the company's increased spending costs but minimal sales, there needs to be evaluation and looking for the main problem is why a company or business always suffers losses, this must be thoroughly studied before actually closing the business, because in business it is not only about sales, profits and losses, of course the management of the business must also pay attention to both management production or something else, what is certain in my opinion is that the problem is about financial deficits because production costs need to be innovated and reduce quality so that prices are not too expensive, as well as other problems.

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If it's not making any profit, then what is the point of keeping the business? If the profit you're making from it only caters all the business expenses, then it's just being break even so it means that there is a problem with the business. The main goal of every businesses is to gain profit. So if you're not gaining, you're not achieving the goal. But it doesn't mean you can just close down the business. You can have another option, which is to redevelop your business, either in terms of your product/service or how you market your brand. But if that's still your problem even after years of operating a business, then it's better to close it. Try another business idea if you still want to have a business.

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Very interesting discussion, but I would also pose a slightly different question: should I start my own business?

Data from the BLS (Bureau of Labor Statistics) shows that, approximately:

20% of new businesses fail during the first two years of being open.
45% during the first five years.
65% during the first 10 years.

Only 25% of new businesses make it to 15 years or more. Of course, longevity is not the only factor that denotes success: if your business can make you rich in the first two years, you might want to close it, although in these cases it is more usual to sell it to a new owner so they wouldn't be considered as failed.

Reasons:

So, if you detect that your business has serious problems with any of the factors above, you should think about solving it asap, if it has an easy solution, or don't wait before closing it down so you can better focus in new opportunities for the future.

Source: Investopedia

Other sources are much more pessimistic, and I don't know whether that pessimism is based on the country or other data, but they declare that 90% of businesses close in the first 3 years.

umbara ardian

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Of course, maintaining a business for a long time without achieving profitability is difficult and may lead to the decision to close.

In today's uncertain economic environment, soaring prices and numerous challenges, ensuring a profitable business is an important factor. If a business cannot make enough profits to survive, the decision to close is justified.

It's important to think carefully about continuing to run your business or finding new ways to increase profitability. Sometimes developing another business plan or seeking professional help is the way to change things.

knowngunman

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Quote from: Botnake on July 14, 2023, 04:29:56 PM

I guess even 3 years is already long enough. Once I’ve never seen the positive impact of my business and it never shown any sign of progress in just a year or two, then leaving it could be the best thing to do than to prolong my business while there is no sufficient amount of income that is getting in. Otherwise, I might be triggered to take loans and might end up regretting.

Two good years is even too long in my opinion. How will one survive during that two years without any improvement? I consider one year at highest because that's quite enough time to see the development of the business and detect either it will prosper or collapse. A progressing business should be known between one to six months and for the benefit of doubt I increase it to one year which is enough time to assess the situation and map out another plan. Although business nature and environment determine how successful a business can be but nevertheless, unprofitable business should be abandon without a second thought no matter how short or long the period might be.

Setting up a business required certain plans which influence it prosperity or otherwise. If you stick to the plan and it seems not to work, kindly desist.

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I don't think it's a wise decision for you to stay in a losing business for a long time. It takes 3 years to build a loyal audience, which can happen for some experienced people. For a regular grocery store, if within three years there is no profit but only loss, there can be many objective reasons such as customer target, location, product type, etc. In this case, it may be necessary to consider selling the store to someone with the knowledge and skills to repair and improve the store, as continuing to open the store may only increase costs without guaranteeing the repair extension guarantee.

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Quote from: AmoreJaz on July 13, 2023, 06:54:58 PM

Quote from: DrBeer on July 13, 2023, 08:14:23 AM

reread the issue again. Many questions and thoughts:
1. He agrees with the 36-month term. If you do not have the means to maintain and support the business for more than 12 months - then this term is 12 months. Perhaps he means that if you have not made a profit in 36 months and have not taken your place - just bury the business, it will never be of any use.
2. Why are the options not considered - freezing/conservation ?
3. Why is not considered the option c attracting investors and SPECIALISTS who will help find the "thin places" and help to restructure the business, to improve its efficiency.
4. Why is not considered the option of selling the business ?

in my opinion, the OP should consider selling the business if he is not seeing any light down the road. it is better to get something rather than totally losing the business without getting anything from it.
some questions are left unanswered as we don't know more details about the real financial situation of the OP. also, he knows for sure the chance of his business in his area, if the business can be revive or not.

Bro even in just few months you could already see the progress of your business, you could see them by your number of customer everyday, reviews and orders from your business. If you think there's already lacking in your business in just few months then for sure you would so something to improve your business. But after years there's no changes, then the business is not for you literally. you could still explore other options that could suit you. Cuz you've already tried to revive it despite of many months of running. If you're still planning to run a business, just make a well made business plan before establishing one so you it wouldn't be a hassle once you've finish building your business.

DrBeer

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Quote from: AmoreJaz on July 13, 2023, 06:54:58 PM

Quote from: DrBeer on July 13, 2023, 08:14:23 AM

reread the issue again. Many questions and thoughts:
1. He agrees with the 36-month term. If you do not have the means to maintain and support the business for more than 12 months - then this term is 12 months. Perhaps he means that if you have not made a profit in 36 months and have not taken your place - just bury the business, it will never be of any use.
2. Why are the options not considered - freezing/conservation ?
3. Why is not considered the option c attracting investors and SPECIALISTS who will help find the "thin places" and help to restructure the business, to improve its efficiency.
4. Why is not considered the option of selling the business ?

in my opinion, the OP should consider selling the business if he is not seeing any light down the road. it is better to get something rather than totally losing the business without getting anything from it.
some questions are left unanswered as we don't know more details about the real financial situation of the OP. also, he knows for sure the chance of his business in his area, if the business can be revive or not.

I'll be honest - maintaining a loss-making business for 3 years is not a smart move. Perhaps there are businesses that were born before the public came to understand this business, and it takes 3 years to build a loyal audience. But this is the exception rather than the rule. If you take the example of an ordinary grocery store, which for 3 years does not bring profit but only losses - then there are good reasons - audience, location, assortment, ..... Sell to someone who knows how to fix and improve it. Any other steps will only increase costs, and irreversible

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