Shut It Down or Double Down?
This month’s blog was mostly inspired by a YouTube video I saw recently about the story of Nathan Barry, who is the founder of Convertkit. Convertkit is a software app that many small business owners use to push email notifications to their clients. Though Convertkit has now surpassed $30 million in annual revenue, it had some very tough years early on. In fact, a friend and fellow entrepreneur had once advised Mr. Barry to shut down the app because after several years had elapsed, Convertkit was still not functioning well nor reaping financial success.
I would venture to say that all small business owners, including myself, have contemplated whether to discontinue a particular business segment or even shut down an entire business at a point when results were not what we had hoped. Though entrepreneurship requires a certain level of optimism—at some point, if the results are not lining up with the goals we have set, we must ask ourselves the question that Mr. Barry did, “Should I shut it down, or double down?”
Finding the answer to this question is not easy, but the following are some of the things you may want to reflect on according to Mr. Barry’s video, as well as some of my reflections on the topic from my experience as an attorney and CPA.
Do you Still Want This as Much Today as the Day You Started?
This first consideration is probably the most important because it largely determines the answers to the remaining questions. Many of us have begun endeavors in our lives that we came to realize we were not passionate about over time, and those endeavors eventually fizzled out. Suppose the endeavor you’re currently involved in has become drudgery for you. How likely are you to want to contribute additional time, money, and attention or take in the feedback of others to produce more successful results? It is perfectly fine to realize that you are no longer as passionate about the business now as you were in the beginning. If you decide to shut it down, you may find more success with a business (or a new career) that you are truly passionate about while taking the lessons you learned from the business you decided to discontinue.
Have You Given This Endeavor Every Possible Chance to Succeed?
Many small businesses fail—and sometimes, it is due to factors outside of the owner’s control. In fact, many of my clients who are successful entrepreneurs have had a business failure and moved on to something else that eventually worked out. But if we want a business to succeed, we must devote the time, money, and attention that the business deserves. If you have already devoted all the time, money, and attention that you can and the business is still not working, even if it is a business you really want, it may be time to shut it down.
Time, money, and attention are all limited commodities, so if you have decided that you really want the business to work, it may require sacrificing some leisure time, making financial investments into what will get your business to the next step, seeking appropriate advice from knowledgeable professionals, and putting in some long days. Investing the necessary time, money, and attention is easiest if: 1) you are single with no children (or an empty nester) or 2) if you are married/partnered with someone who also believes that these sacrifices are worthwhile. But if you are in a position where your partner and/or children do not support what you are doing and the related sacrifices that it requires, be sure to read through the end of this article.
I want to talk a bit about businesses that are experiencing losses. Anyone who has been in business long enough knows that revenue and profitability can ebb and flow. The fact of having a loss does not mean that the business is not worthwhile or that it is being managed improperly. However, it is important to assess profitability on a regular basis and make the best decisions you can to produce profits. Not only because businesses with losses are a target for IRS audits (that can be time-consuming and expensive to handle even if you win), but also because you can only discontinue the cycle of losses if you evaluate what is causing them. As the famous Albert Einstein quote goes, “Insanity is doing the same thing over and over again and expecting different results.”
Have You Listened to Feedback from Others?
All of us as small business owners must humble ourselves from time to time and listen to the feedback of others. Though no one likes receiving negative feedback, sometimes we can use feedback to move forward in our current business (if we decide to continue on) or in a new business we may start in the future. We definitely must consider the motives of the person offering the feedback along with our decision of how much weight we give it. Sometimes the negative feedback may be the result of targeting the wrong customers or needing to narrow down your niche a bit more. But other times there could be valuable ideas to consider within that feedback that we can use to improve our products and services—especially if the feedback is coming from someone who you believe truly wants you to succeed. Mr. Barry’s friend advising him to shut down Convertkit was the catalyst that inspired him to turn it into the successful business it is today.
If you are trying to decide whether to discontinue a particular aspect of your business (or shut down your business altogether) and you would like some unbiased advice from someone who is passionate about helping small business owners, please contact me using the link below.