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P&T Consulting
01-17-2014, 11:03 AM
Hello everyone. A company that we work with regularly contacted me for some advice the other day and I honestly didn't know how to address their issue. They opened in 2012 and they have had their ups and downs; the past 6 months have been all down. The owner basically told me that if he keeps his doors open it will eventually bankrupt him. He wanted to know if he should stick with it and take out more loans (which could devastate him financially) or if he should close down. Personally, my company is my dream come true, it does cost a lot to maintain; however, I could never see giving up. I think if I were in his situation I would make a gamble and take on loans. In my experience it takes years in the red to go into the black, right? What do you guys think? When is it time to call it quits? Is running your dream business worth the risk of going broke personally?

AliceT
01-17-2014, 01:00 PM
In my opinion, it is not worth the risk to your personal finances. We all fall in love with our companies, but at some point, you have to stop the bleeding and cut your losses. One of the companies I sold to recently closed its doors because it had been operating at a loss for 3 years. The owner kept it going in the hopes that things would turn around and he would be able to make a profit, but he eventually realized that he would never be able to recoup his losses. Consider how much you are putting into the company, and based on your max profits, how long would it take to pay off the loans?

If you just can't stomach the thought of closing your business, get creative and try to think of different products/services to provide that may be more profitable.

fredkawig
01-19-2014, 08:59 AM
6 months of loss? How big is it? If the loss you are talking about is thousands, hundreds of thousands to millions, the company owner should really consider the financial and legal consequences of his actions. For the accrual of debt that he has and if he continues to loan/borrow money, he could be in serious trouble once he goes bankrupt and the banks and lenders that he borrowed from sue him for payment. I do not know what law governs your state or country but usually some countries include jail time for those who cannot pay of their debt especially when you have signed a contract. I would suggest that you advice your boss/company owner to think this through because there can be a lot of consequences when this incident spills over.

hillaryNC
01-20-2014, 08:53 PM
I think you should stick with what you believe, if it is reasonable! If his business is gone really bad, then maybe it's time to close. If he has a family, he should definitely think about his families needs, and put them first.. even if that means giving up his dream. He could also try to partner up with someone and get more capital from them. Although it means sharing the profit, it may help him to keep his business alive!!

smartmom
01-22-2014, 10:45 AM
I really wonder what type of business this is. Is there a high demand for this businesses services. In my mind it just depends. I can't see digging a deeper hole for myself and I feel pretty blessed because I manage to run businesses that do not require a lot of money. There are so many questions that I have because I don't know anything about the business. Could there be problems with the way the business is run? Could there be areas where some of the spending can be cut down? This is hard to say. Are there too many employees to have to pay salaries. Why is the business struggling so bad? It's hard to say because for so many businesses, the first five years are hard anyway. For me, however giving up is not an option. To close a business also does not always mean giving up either!!

swagger
01-25-2014, 06:00 PM
It really isn't worth the risk, in my opinion. If all he's seeing is losses, then there's no point in keeping it open. Sure, companies will occasionally lose here and there, but if you're just constantly losing money, then there's no point in keeping it open. It seems like his business isn't working out, so there's no point in keeping it open. I'm not saying give up by any means, he should reopen a new business after closing his current one, in my opinion.

GordonTheComputerGuy
01-27-2014, 04:51 AM
In this economy I would cut my losses or at least downsize to a one or two person operation.
Sometimes life sends you a signal that it's time for a change, not a failure.

DennisChang
01-27-2014, 06:37 AM
There are a few alternatives to taking up loans :
1. Rope in new shareholders / investors - Draft a business plan, construct your business model, and try to convince people to invest.
2. Get a part-time job to bring in additional income while sustaining the business
3. Find new avenues to bring in revenues - You may consider offering new products / services to your existing clients by partnering with other companies

nowicki2013
02-01-2014, 12:11 PM
If you're losing money and about to go broke then I would definitely make some serious changes. I wouldn't necessarily say "throw in the towel", but maybe just try something different. Having your own business and making your own money is part of the American Dream, never give up! You just have to take a look at what's working and what's not. Whatever is working keep it the same and what's not, get rid of it. Just don't forget, keep the dream alive!

Taru
02-03-2014, 09:46 AM
I wouldn't recommend risking personal finances as much as possible, however, if there is a solid plan on how and when the money can get paid back without much bias, then I'd say it can be worth the risk. If the plan relies too much on just hoping for the best, I'd say it may be best to just stay alive for now and live to fight another day when a better plan or idea does come along.

Sally108
02-03-2014, 01:34 PM
In my opinion, it is sometimes hard to give up on your business because we look at it as a failure. In this respect I understand a person not wanting to close down the business. You must first change your view of failure. We have all heard the stories of how many times great people have failed (think Edison & Disney) only to achieve their goals, and then some. I would not risk personal bankruptcy though. I would just get a new plan!

Musho
02-04-2014, 10:32 PM
I think you should call it quits for now. As in, you can prevent yourself from going bankrupt, and save a lot of money. Then, somewhere down the road, find a partner, one who has succeeded many times or at least enough to be your partner. You should come back to the same general idea/ theme, because that is the one that interests you because modify it in a way that will net a pass.

KNH
02-04-2014, 10:50 PM
I'm not sure exactly how much money is being lost but I honestly feel if the person is in serious danger of going bankrupt and losing everything he/she should give it up. In this day and age money seems to be tighter for more people and risking everything might not be worth it. As someone else stated, I would find a successful partner to work with to make a business succeed.

caveman
02-10-2014, 09:49 AM
Personally, if the business is going at a loss for more than 6 months and would eventually go bankrupt, I would call it quits. But this doesn't mean that you should give up on your dream. Maybe it's not the right time or the right location. I would set it up again after carefully planning everything out and when I have the money again!

tspires2
02-10-2014, 09:55 AM
That really depends on so many factors. With being open for 2 years they should be getting to a profit area or at least can see the light at the end of the tunnel so to speak! Have they been profitable the past 1 1/2 years and something changed in the past 6 months? If so that is a pretty simple fix. Just figure out what went wrong 6 or so months ago and correct it. This could save the business. Now of course this may not save it completely but there may be hope just looking back on what happened and how to correct! Just a thought before they go either way of opening and closing you really need to know what happened. Basically you can't fix what is broken if you don't know where it is broke at!

JohnSword
02-11-2014, 02:04 AM
Sometimes it's hard to let go of something when you've invested so much time, effort and money into it. However, after reading about the owner's situation I would definitely advise him to reevaluate his business. Find out the problems causing his business to lose money, then see if they can be solved.

6 months is not that long. However, if his business can't be salvaged then it's wise to shut it down as soon as possible. Remember, loans add up, and you are unable to pay them back, then you'll soon find yourself in a world of trouble.

Cadence
02-21-2014, 12:28 PM
I think it's really hard to know when it's time to throw in the towel. When it's time might also be different for different people and different businesses. It's hard to say what's right for you. I believe it's something you have to really think about and imagine every possible outcome. Going bankrupt is never a good option..