How Long in Years Should I Wait Before I Close Down an Unprofitable Business - page 9.

MiF

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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=

For me i think 3 years is a perfect time to close unprofitable business because if you don't close your unprofitable business it will surely make your capital loss because there is always a big expenses on making business specially eatery business, you need to pay electricity, water bill, etc., So in 3 years if business doesn't work we need to close it.

Smartprofit

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I am still a supporter of the approach in which a businessman should receive income from his business as early as possible.

Even in venture investment, according to statistics, it is precisely those companies that have already demonstrated successful financial results before the start of receiving investment funds that survive.

If we talk about business in the form of a public-private partnership, then the situation there is a little different, but in this case, the new business has support and guarantees from the state. If you are not connected with the state in any way, then your clients are the sources of your income.

If you have not been able to attract customers and get paid from them over a long period of time, then it is very unlikely that in the future the situation will improve in some miraculous way.

xSkylarx

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During the pandemic, I had a small business delivering infant and children's clothing door to door to their homes. When business slowed because people could now go outside, I immediately closed it down because I was spending money that would not be returned to me. I think 3 years is very long, and for sure you lose huge money on that. You could shorten it if you analyze more why you are not getting any profit.

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Minor correction, his name is Kevin O'Leary, not O'Neill, and he was also an FTX cheerleader and called for regulation after the exchanged collapse.

Not all of his takes are great, setting some aside, I don't disagree with him here. He's a successful investor despite his crypto related venture failures and is correct -- after a certain period, whether it be 36 months or not, businesses that are not profitable should on longer continue to operate. The institutional guys understand this. A lot of the Silicon Valley tech start ups torch money for the first years until profitability, or until they get bought out by a larger firm. After a few years, if it's not profitable the VC money stops coming in. Seemingly people that might be new entrepreneurs and get personally vested into their ventures could benefit from his advice.

dothebeats

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Depends on how hard of a hit you can take. Most small-time business owners will probably close theirs in a few months and sell everything, whereas medium to large ones can wait a year or so before deciding that they should jump ship. I say, no definite time-frame can be given in regards to this matter. If you can operate at a loss for a while and strike some opportunities then hold on to it for a while. If not, better sell it or close it in order to avoid more losses.

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

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 ?

I did not understand how he reached the conclusion of "3 years", when most investments in most sectors cannot withstand all those years without making profits. In my opinion, this measurement varies from business to business. Agricultural projects, for example, may take longer years before trees grow and bring profits.
It may be possible to determine an approximate time for business in a specific sector, but it is not an average rate for all business in all sectors.

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

-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?

The new ideas proposed by startups can struggle for years before they find a catch. There are many examples, including the best applications that we use today. Of course, it is not possible to define a criterion that we can adopt to measure time distances before we say whether the project was successful or just for fun.

Russlenat

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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=

Certainly I have not experienced like that. But maybe if there is a change of strategy or management, that would be possible. Like in big shopping malls, at first it was gaining less profits due to poor management but when management has changed, it came out that it’s getting maximum profits every year. But maybe in a small business, I don’t think if it’s gonna work again if it has already fall from the start.

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Quote from: inthelongrun on March 31, 2023, 09:12:18 AM

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.

I agree with you. Big business with big capital may take time before you begin to yield profit but even at that, I feel three years is too much for a business with a big capital to start yielding profits, if it's not, then it may be time to cut your losses and move on. If you are to continue with that kind of business then maybe you have a different approach. If you properly evaluate your business, you should be able to estimate how much your business should make at the end of the year.
Realistically, there may be no exact period to shut down any business partly because the industries differ but it will also help to know when to cut our losses.

A business of $20k as a start-up capital is relatively a big business. I'm sorry it didn't work out.

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Quote from: goinmerry on March 31, 2023, 06:34:15 PM

This is stressful to think honestly and we will never truly understand the real pressure on those businessmen who actually experienced that kind of situation.

It now depends on those set of reasons we see on "why we keep operating despite being unprofitable".

But one thing is for sure, "there is no certain exact period".

As said we can't have an exact time period on the closure of a business and move towards a new one, because we've invested everything into it. Switching to a new business costs us even more. Most of the time it is good to try until the business doesn't cost us to pay from our pocket. When the business turns completely into loss, then it is time to get out of it. In recent years COVID have caused a big blow and for that reason we should consider to keep things positive and move forward. It takes time to get better business.

goinmerry

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This is stressful to think honestly and we will never truly understand the real pressure on those businessmen who actually experienced that kind of situation.

It now depends on those set of reasons we see on "why we keep operating despite being unprofitable".

But one thing is for sure, "there is no certain exact period".

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First you need to understand why the business is unprofitable. If a niche or place of doing business is unsuccessfully chosen, then it must be hidden immediately, despite the initial costs and illusory hopes. To continue the business only because of ambition or because it is a pity for the supposed invested money is stupid enough

STT

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3 years is enough to use up all your money, that might be the less theoretical point to this balance in any business. IF you want the full time scale then 6 years is the full amount of time before some business will become profitable hence why so many start ups have alot of debt. To operate some mines for example can require ten years of investment, there is a strong bias to large business in that way which is fairly inevitable.

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36 months of not taking a profit are too long for me. Often I give it 24 months to see whether the business for me or not. Besides, maintaining a business cost money, and if we are unable to sustain the business even after a year, it is wise to shut it down than applying for a loan to make it survive. After all, I believe that if something is for us, it will work out no matter what challenges are put in our faces, and if it is not for us, it will always fail no matter how hard we try to sustain it.

Better to determine whether the business is for us or not to avoid unnecessary losses of money, effort, and time. The sooner the better.

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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 have not been to any kind of business like that before, but if I observe any business after a year without no profit, I need to quit and find another alternative thing to do. I don't think there is anytime to waste with any business that is not bring profit between a year. But in some cases I may change the business strategy if truly I believe much in the business but despite this reason of change the business strategy, I can't still be waiting for four years to think that the business may turn around.

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Quote from: panganib999 on March 31, 2023, 04:07:20 PM

I would agree with O'Neal on this one. A lot of times sunk cost fallacy plays its part and fucks with the people's head with notions like "this has been a part of my life for X years, I just can't drop it that easily can it?" or "I've invested so much of my time and energy on this business" which is just sad. Although I would really look at it this way for the most part: You keep two things in your life. If it makes you money/lets you grow as a person, or if it makes you happy. In the case of setting up a business only to one day make it your hobby, if it makes you happy serving customers and all that then by all means go for it! But if it's just weighing your finances down, stresses the hairs out of your body, and leaves you empty as hell, then drop it. It's a toxic relationship at that point.

which means, you need to listen to your instincts regarding this matter. because you alone, would know if there is indeed the potential to make it thru in your chosen business. but if your instincts is saying you need to stop, then follow it. instead of losing more money and being stressed about it, cut it off while the damage is not too deep.
you need to assess if the situation is doing more trouble in your life or not, swallow your ego that you can't continue your business anymore. maybe, it is high time to change your chosen business. check out your community which you think would give you more potential to succeed.

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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=

Probably, if the business never works from the start, then it’s hard to expect that it will still be profitable in the next months or years. However, if you change your strategy on handling the business, might as well that it may start working. This has happened to some businesses, at first there was seen no progress, but when there was a change of management, it started to work and prosper. But there might be some exception too. Like in business that was never in demand, or it’s not position wherein consumers are highly accessible, then mostly business like that will never make any chance to be profitable.

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I tried remembering where precisely I read about this but couldn't but I read where an author was talking about 5 years before deciding if a business is profitable or not and I also see no reason why one should hold onto a business for years when it's not giving him any returns especially when money, effort and time it's been put into it.
I know most people might reference the cases with ancient inventors who took years to invest things but that was then and now if a business isn't giving you any profitable return after one years, then that business should be reconsidered and the 5 years I mentioned earlier was time to consider if one is successful in a business or not but I think one shouldn't continue a particular business after even just a year if there isn't any profitable returns.

panganib999

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I would agree with O'Neal on this one. A lot of times sunk cost fallacy plays its part and fucks with the people's head with notions like "this has been a part of my life for X years, I just can't drop it that easily can it?" or "I've invested so much of my time and energy on this business" which is just sad. Although I would really look at it this way for the most part: You keep two things in your life. If it makes you money/lets you grow as a person, or if it makes you happy. In the case of setting up a business only to one day make it your hobby, if it makes you happy serving customers and all that then by all means go for it! But if it's just weighing your finances down, stresses the hairs out of your body, and leaves you empty as hell, then drop it. It's a toxic relationship at that point.

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

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

Depending on the kind of business.

- If it is a business around a skill that has the potential to be useful in the future, you have to hang in there and be a bit more patient for the skilled service your business needs to be in demand.

- If your business is based on a skill in demand but the business is still very unprofitable for you, you can stop that business and find something else that will be profitable to you. Maybe it is not the business, but you. Not everyone is cut out to be able to handle the difficulties that come with business. Some people are better being employed than being the employers.

- If your business is based on no sort of skill or a skill that is no longer in demand, and with the time you have put into it, there is still no profit, you should just quit.

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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=

It depends on your situation as a business may not be profitable (temporarily) for many different reasons: like for example, you have to pay off loans or investor money, or maybe you're paying exit money to your partner who decided to quit... in all these cases, a business may be profitable after you pay your dues. Cool

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