Starting a new business is like starting a new relationship. But how do you know when your business is bad for you? When is it time to break up?
It’s easy to see how starting a business is like a new romance. You’re filled with excitement and expectations are running high. Viewed through the extra-thick pair of rose-coloured glasses you’re wearing, your new beau, I mean business, has no discernible faults.
In short, you’re not at all focused on what could go wrong; you’re high on the possibilities of what could go right.
That was certainly the situation I found myself in when, at age 25, I signed a restaurant lease.
Reality quickly showed itself to be a little different of course. And after a while, I realised that businesses, like relationships, are going to have their ups and downs. Sometimes you’ll love them, sometimes you’ll hate them and as the warm glow of honeymoon period dissipates, you will develop a more realistic understanding of your other (business) half.
My relationship with my restaurant? It was a roller-coaster six-year journey featuring extremely seasonal trade, fickle and demanding customers, high costs and chronic lack of capital. So many times I lay in bed at night, wide awake and stressed to the eyeballs, wondering if it was time to call it quits. Battling the desire to ‘get me out of here at any costs’ was hard, but harder were the heavy financial losses if I did jump ship.
It’s very common for business owners with a poorly performing business to find themselves in this predicament. So often they find themselves wondering:
“Did I do something wrong?”
“Am I trying hard enough?”
And the ever insidious, “Maybe it’s just me.”
Waiting for things to turn around is agonising. Each passing week might bring improvements, but they can also be as disappointing as the last. This waiting game is not good for mental health and if it goes on too long, you (hopefully) start to realise your imperfect partner is probably not a good long term option.
Considering breaking up with your business is tough going.
Just like a real relationship, exiting a business involves a heady, complex mix of emotions and facts, tied up with feelings of failure, anger, disappointment, financial loss and reputation. It’s one of the most heartbreaking decisions you will ever have to make and it’s very hard to sort through fact and feeling in order to make a rational decision.
So how do you know when it’s time?
Only you can decide how long to wait before exiting a business, and what your limits are.
In my opinion, most businesses fail because there is not enough cash to meet the business owner’s expectations. In this situation, the failure to achieve financial goals (or worse, lose money) must be weighed up against opportunity cost and your chances of making a financial recovery.
In the end, I allowed my restaurant to take my nerves to the absolute limit. I eventually sold it after two years on the market.
Later in my business career, I acted more quickly and decisively when a consulting joint venture was failing. After two years’ hard work – even though there was a lot of potential – I made the decision to break up.
By that time I knew my limits.
Have you ever had to break up with a business?