By Ashley Preen

August 20, 2019

Is it time to shut down your business?

Starting a business is an entrepreneur’s dream. Bringing the vision to life takes a lot of courage, hard work, and effort. Researching the market, understanding the techniques of competitors, providing quality products and services, all of it takes time and effort and is no easy task. However, some unfortunate circumstances might lead all of the hard work to waste. Well, not precisely waste. You do learn from your failures and experiences; hence, you shouldn’t just give up. But it is necessary to be ready to go through the phase where the business has to be shut down.

Like starting a business is tough, shutting down a business is tougher. Moreover, it is no easy task to figure out when to shut down your business. There are no hard and fast rules, and sometimes if the business is going through a hard phase, it gets out of it if the right steps are taken. However, there will be times when it will become essential to shut it down. These could be when there are continuous dry periods with no profit, or when the average variable cost is not being met. Sometimes it is due to lack of interest of the customers, and on other instances, the entrepreneur himself loses interest.

There can be a lot of warnings and signs that you need to keep an eye on while running a business. All of the indications and warnings will give you an idea about whether it is time to shut down your business. Nobody likes to keep an eye for such thing as it means looking for signs to end your dream that you have worked so hard for. However, these signs shouldn’t be taken as negatively since they help compromise the losses caused by shutting down the business to a great extent. If an already deteriorating business is shut down at the right time, a lot can be saved.

Moreover, you can learn how to avoid all of the reasons when you move on to the next business and end the current one gracefully. Let’s have a look at some of the significant warnings and signs that tell you whether it is time to shut down your business.

Profits are running low

There can be two meanings to this: either the profits are exponentially decreasing, or they have decreased to the extent that the profits are negative, i.e., losses. In either case, it is a clear-cut sign that something is wrong, and you should start considering shutting down the business. As a car runs on fuel, a company runs on money. If there is a shortage of finances, the business will start deteriorating.

Every company has a break-even point. If you fail to meet the break-even point after some time in the market, it is a significant indicator that the business won’t progress positively in the future unless drastic measures are taken. Here you need to consider how many years you have been in the game. If it has been around 3-5 years and you still haven’t made enough profits, you are in big trouble. Moreover, if you don’t have enough savings to survive for the next three months, shutting down is the best option to avoid further loses in the form of negative profits and loss of capital value over time.

If you aren’t meeting your annual profit goals even after working at full capacity of the business, you won’t be able to pay the bills and cover expenses. You might also have to take debt to carry it forward. When it comes to this point, you need to realize that you might be in the wrong market.

Preventive measures sometimes help but not always.

Preventive measures sometimes help

It is advisable to take some preventive measures and make changes to alter the situation. But these shouldn’t be given much time and effort. If the modifications and alterations don’t work, accept your fate and move on before you drown yourself in further losses and debt. Realize that maybe this is not the thing for you and start looking at something else. Only consider pulling yourself back if you have figured out the real problem and sustainability is assured. If not, then it is time to shut the business down.

The passion is gone

You only succeed in life if you work with all your heart. The passion needs to be there for hard work. Otherwise, you just depend on sheer luck, and it is not always enough. There are some vital signs that indicate if you have lost the passion and thrill you received from doing the business.

If you have forgotten what drove you to initiate the business, it is a sign that shows the passion is not there anymore. This also means that your mission is not vivid anymore, and it becomes dangerous for the business. There is no point of working tirelessly over something that leaves you empty by the end of the day. It will become unhealthy for you as well as the employees. The challenges become a headache if you stop enjoying them.

Try to make amends

At this point, you should start changing the shape of the business to make it enjoyable. If the business is not bringing any joy to you, then it just becomes exhausting, and you won’t work as hard as before. There will even come a point where you would want to quit. Don’t take yourself there. If you’re going to minimize the losses, actively look for these signs throughout and take steps to counter it.

If making changes doesn’t add to the thrill and enjoyment, then know that there is no point anymore. Know that you only have one life and wasting it over something you don’t enjoy will only make things worse. Look at something fresh. Maybe your mind has directed itself so something else that interests it more. Start considering shutting down the business and make moves to shift your efforts to a new startup.

You see a change in your personal health

If you aren’t healthy yourself, you cannot make your business generate healthy profits. That is it. If you notice changes such as weight loss or gain, constant stress, fatigue, etc. you need to realize that if all of these unhealthy traits are worth it. Being tired due to working long enough for your business and being constantly fatigued and exhausted are two different things. The latter is because of the passion that drove you to start a business in the first place. The former is due to stress and anxiety that is not at all healthy for an entrepreneur.


Here you need to decide if the business is causing you the same anxiety and stress that your old 9-5 job did. The very reason you may have decided to start a business. If it has come to this point, then know that it is time to quit this too and move on to something new, something better. There is nothing wrong with putting your mental health first. It should always be a priority because psychological effects on the mind can have long-lasting impacts and may leave you unproductive for an extended period of time. In this way, you won’t be able to start up something new or enjoy your life at all. It will become a nightmare in the long run.

So, look after yourself, and if you are doing everything right and still becoming unhealthy, then your business isn’t right for you. It has become the 9-5 job that you loathed and should be shut down immediately before health deteriorates further, and you make conditions harder for you to shut down. Both the emotional and physical deterioration of health is never worth the work you do. It only means it is something you shouldn’t be doing anymore.

The market for the product has shifted or doesn’t exist anymore

Before we elaborate on this point, let’s have a look at Nokia as an example. The company lead the mobile phone market and thought it would continue to do until smartphones kicked in. The market ceased to exist for regular mobile phones, and before Nokia realized, it was too late. The lesson here for you is that don’t be a Nokia.

It is considered easier to find the right product or market for yourself, but entrepreneurs usually fail to make a reasonable estimate of the market size or fall into the false demand trap. It is due to this reason that businesses fail. Initially, the business can boom at a good pace, but you never know when the market conditions change. It is something out of your control.

So, don’t fall into the bliss of your current success and keep an eye on the market and demand. If you realize that the market has changed and your product has lost its place or has been replaced, it is time to move on. It is a fair warning and considering it happened to a company as big as Nokia, and then you are not safe either. Have a good back up plans for such market conditions or keep on updating and researching on the product and market. If you do so, it will be easier for you to adjust to the change.

On the contrary, if you aren’t prepared, and the profits start to fall suddenly and don’t stop, make your move and shut it down. Don’t hold onto the false hope of recovery because again, Nokia couldn’t either. So, unless you are sure you can take the shock and come back stronger, don’t waste your time and find something that has a popular demand and a market to work in.

The pillars to your business (employees) are leaving

A business cannot be run by a single person unless it is on a very small scale. All companies need employees to run and grow. Some of these employees become the key to the success of the business. Those have stayed for a long time and are familiar with how things work around. These are the people that you need to make the business grow and continue on its road to prosperity.

The pillars to your business employees are leaving

However, if the key employees start to quit, then it is a significant warning for you and the business. It means that either they know something that you don’t, or you have failed them in one or the other. In either case, you need to realize if the damage is repairable or beyond your control. Ask yourself where you went wrong with the employees.

It is no easy task to bring up a team of professionals who help your business groom. It is harder when the resignation from these employees start to come in. At this point, you either figure out the problem with your business and consider whether you have enough resources to bring up another team. If you can’t, then it is better to bid farewell to the company as the employees did to you because it will become a terrible job to pull it back from the pit it has fallen in.

Customer engagement declines

Customer engagement declines

The idea is always yours, but you can never put yourself first or enforce it on someone else. The customer always has to come first. If the customer engagement is declining, it merely means that people don’t like your product anymore, even if you do. You need to realize why this is happening. It could be due to two major reasons: either you are putting your ideas and needs first, or the quality isn’t good enough. In either case, the key is that if you don’t have customers, you don’t have the business.

So, if due to lack of fulfilling customer requirements and being self-centred you have lost potential customers then know that it is time to shut it down because of the trust and loyalty are lost, it is hard to regain it. Moreover, it is never the same as before. You may try to make amends, but it usually doesn’t help, and a drastic decline in customers means it is time to shut it down and move on.

Self-recognition has vanished

If you aren’t the same person as you were when you started the business and haven’t grown to be someone better than a significant realization is needed. If the company has become a hassle rather than pleasure has forced you to exploit your social obligations, then it is time to call it quits and shut it down before you lose everything else and the business as well. Look out for these changes and ask yourself if you are who you aspired to be when you started. If the answer is no, then you know what to do.

Sleep mode is out of the options

The final sign is when you can’t even consider the sleep mode. Sleep mode is basically a move to make the business go inactive for a while and continue it on a later date. This is usually beneficial because once you have had enough time to analyze the situation, you can make better decisions. However, this needs a lot of research for the future and also an alternate source of income is required during the sleep mode.

If the damage incurred is already great, then sleep mode won’t help either. When this goes out of option, then your first call should be to shut down the business; otherwise, you might suffer heavy losses.

The bottom line

Given all the signs and warnings, it is essential that an entrepreneur doesn’t keep a blind eye to any of these. If precautionary measures aren’t taken beforehand, then the person can incur unbearable losses, and it is never a pleasant sight. Make sure you work hard enough on not just making the business grow but also on how to counter the warnings mentioned above and signs at the right time, so you won’t have to go through the hassle to shut it down and start something new.

However, in some cases, when things aren’t in your control, it is not wrong to shut down and move to something new. It is considered better in such cases, and you learn from your failures and experience is just like knowledge. It helps you in the future with other startups and business once they have grown.