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Thursday, August 21, 2008

Should I Quit My Business?

Should I quit my business, or give it one more go? It’s the question more and more small and micro-business owners are faced with in this tight economy, especially when trying to compete with other business in the same genre, and the same position. I’ve been approached by a handful of colleagues in the past month asking for advice on whether or not to close up shop or just keep trying. And while I wish I had a magical answer to make the decision easier for my fellow moms-in-business, I have noticed some common elements which need to be addressed before anyone even considers closing a business.

No matter how you started your business; be it on a whim without a business plan, or carefully thought out with an executive plan, several factors come into play with each business that helps predict future success and longevity. Small business owners sometimes feel like these factors are incidental, or that they don’t have the power or ability to take them fully to heart. But, if you’re considering closing your business, you should.

Common factor #1 is that many people still believe if they build a website, people will flock to it no matter what.

Knowing that it typically takes 3 years for a business to start making money, I see many moms who want to throw in the towel after only 9 months to a year! I recently received and email from a woman who was frustrated and wanting to quit her business after 6 months of no sales. She had a fully stocked website, a great supply of inventory, a mother-in-law who was willing to help her fill orders and create new inventory, and had made an effort to advertise her business through link exchanges. She had only been in business 7 months.

Why did she want to quit so soon? She hadn’t received any sales from her website and needed to start paying on the credit card she charged business expenses to. Her perception of her business is that her site was great and products were great, however no one was buying so she was a failure. Frankly, she wasn’t giving her business a chance or herself enough credit.

After chatting, we decided she would revamp her business focus. She already had a great support system in place with a relative willing to help with inventory, she was prepared for sales with a good inventory stock and an attractive, well designed website. Her focus shifted to driving sales through online advertising, much of it free through blogging, creating content articles, link exchanges, etc, and also on starting a direct email campaign to customers who had purchased from her at craft fairs. TO bring in money and take some financial pressure off, she agreed to watch a neighbors child three times a week. She also faced the reality that she may not make money in her first year-however knew with a good advertising plan, she would be making sales by her second year in business.

Common factor #2 is many business owners think financial pressure means they are failures.

Anyone who jumps into business without a financial back-up plan is likely setting herself up for some rough financial times. Even if you have the best new product to hit the market in a decade, there should still be a source of revenue coming in until the business is making money.
An online friend emailed to say that she was thinking about closing her business after only 2 years in operation. Despite the fact that her business had yet to show a decent profit ( you know, one you can actually support a family from), her husband had quit his job to become a partner in the business. While a good move in the sense that his help and dedication to the business could help with marketing and growth efforts, it likely wasn’t a good decision from a financial aspect. Now having fallen behind in both business and personal debts from the lack of steady income, both my online bud and her husband had to take part time jobs to bring in more money.

Is it a bad thing to have a second job while running your own business? Absolutely not! Feeling a financial pinch doesn’t mean you or your business are failures! It simply means you need money to keep going. Whenever possible, keep a second stream of income coming into your household to keep your financial mind a little more at peace. I won’t be shy in admitting that I’m still working a part time job in addition to my business so I know, every month, money will come from one source or another.

Common factor #3 is a target market that won’t buy what you’re offering.

They are sneaky, hard to find and elusive. Your target market-you know, the ones with money to spend on your product-can seem like they are always out of reach. Anytime you have a product, especially when economic times are lean-it is beneficial to figure out all of your potential customers, not just those whom you think will want what you are offering.

I recently read a blog post by a woman who thought her business was on it’s last legs because her target market, parents, had stopped spending money on her product. Because her product was a “want” and not a “necessity”, she determined parents were just cutting back on spending, therefore resulting in lower sales for her. She received a plethora of helpful responses, many pointing out that she was missing a crucial target market: teachers and educators. By retargeting some marketing efforts to hit this group of potential customers, the business had another opportunity for sales.

Say you create hand crochet socks and your primary market has been new parents? You’ve noticed less people purchasing your socks as baby gifts and sales are down. Why not refocus some effort to promote your socks to parents of premature babies (keep their tiny toes warm), or gift basket designers for inclusion in baby gift baskets? Someone else needs what you have, and while they may not be the target group you started with, expansion may be the beneficial boost you need to make sales and survive in the long term.

If closing your business is crossing your mind, give yourself the opportunity to think of all the options which can help resolve the issues you are having. Maybe its money, or lack of sales, or lack of time which is causing too much stress. How can you work these things out to benefit you? If, however, closing down your business makes the most sense to you and puts your heart at ease, perhaps it is the best avenue. Deciding to close a business doesn’t mean you’ve had a personal or professional failure: it means you are strong enough to know when to bow out gracefully and do what is best for you.

1 comment:

Luann Udell said...

Superb article with great advice! Thanks so much for sharing these three points. I'm already rethinking my target audience.