Planning for an Exit

Even the most die-hard gambler in Las Vegas knows when to call it quits. Some business ideas weren’t meant to be, or just weren’t introduced at the right time. Maybe the owner and the skills needed didn’t match up. Whatever the reason, smart entrepreneurs have to know the warning signs of a sinking ship. Fortunately, there are many such signs, and it pays to know how to read them. In actuality, there are three parts to the subject of “knowing when to exit.”

First, owners should know how much it will cost to “test” a business idea before launching. This concept related back to the planning stage that dealt with budgeting. How much can an owner afford to spend before saying, “That’s it! I’m out”? Everyone has a financial threshold, some higher than others. The essential fact is this: owners need to have a monetary cutoff point to decide whether the business is worth keeping alive.

Second, diligent entrepreneurs must learn the warning signs, and be able to see when things really aren’t going right. Finally, there is the question of legal dissolution of a licensed business. Some online companies have minimal legal structure except for a personal tax return that gets filed every April. Ceasing operations is simple in cases like these. But, owners who obtained business licenses, perhaps incorporated or maybe even took on partners or investors, will have to be careful about closing the books. Forms may need to be filed with various state and/or federal authorities, city officials and others. For Internet business owners, calling it quits is usually easy enough; but the winding-up process needs to be done correctly in order to avoid future headaches.

The skills and knowledge base for running a successful online business are not difficult to acquire; but they must in any case be acquired! Earning a profit online can be a fun, interesting, empowering activity. It also takes work, commitment and dedication. Wise entrepreneurs learn as much as they can before taking that first step.

Warning Signs and Knowing When to Close Shop

What are some of the common warning signs that a business is not making the grade? Depending on the business type, there are a few that cut across all disciplines and usually spell trouble. When website traffic drops off, that is a sure sign that something has gone haywire.

When SEO and technical updates are not attended to, web traffic begins to shrink, which means fewer visitors and fewer customers. Unless someone has the time to attend to the basic marketing tasks of Internet businesses, things are going to go south.

Owners who lose their passion and interest are usually in the early stages of burnout and the business will almost certainly begin to suffer. Likewise, personal problems can interfere with the ability to conduct a profitable online business. When the desire to success is just not there anymore, an online business is not going to survive.

If it is difficult for customers to purchase something on your site, or when there are lots of customer complaints, it is time to make some drastic fixes at the very least. When a key product is no longer selling due to demographic changes or something “going out of style,” then a seller needs to either find a new product or consider closing shop.

Management experts say that poor planning and lack of commitment are the two main reasons that online businesses fail. Planning problems tend to be the culprit in so many other problems, it’s no wonder that careful planning is usually mentioned as one of the key ingredients of success for both online and traditional businesses.

Other commonly mentioned reasons that businesses fail has to do with poor time management, lack of a specific business plan (there’s that word again!), weak sales efforts, poor communication with subcontractors, trying to do everything yourself, and inadequate financial backing.

Internet entrepreneurs who witness a sudden drop in sales, a rapid rise in customer complaints, or a sharp decrease in traffic should recognize those events as definite signs that something has gone wrong. Perhaps it can be fixed, perhaps not. Either way, one needs to know how to read the warnings and take action, even if that action is dissolving the business, paying off creditors, and wrapping things up.

Millions of people have seen their Internet businesses fail. But a large number of them learned from the mistakes, did everything better the next time, and tried again. Both traditional and online business enterprises fail for all sorts of reasons. The smart thing for an owner to do is regroup. Then, make a list with the heading, “What I learned from my online business attempt” and decide whether or not to get back into the game.

Consider the fact that some of history’s most successful companies were founded by people who had already experience failure dozens of times. Part of being a good manager or owner is the ability to be objective about results. Sometimes the smartest move to make is to close up shop.