3.06.2012

When is it time to let go?

I’ve dedicated a large portion of my blog to providing encouragement, advice and other resources for entrepreneurs working towards building and developing their businesses. Sometimes though, one of the wisest decisions a business can make is learning when to exit a particular market or industry. This might involve switching the goods/services provided or closing the business altogether. Knowing when to “let go” can make the difference between financial ruin and the opportunity to turn over a new leaf and explore other business opportunities.


The world of business is dynamic and as a result, the ability of a business to adapt to these changes over time may also change. A business may have started out as the only one in a particular market and therefore end up being the leader. Over time other firms might enter the industry, the market might cease to grow (ie, no more new clients) and the business may no longer be able to increase its share in the market. In this type of situation where the firm is still profitable, but the industry has reached maturity, it would be wise for the firm to reduce its investments in this industry and begin to look towards alternatives. A more obvious example of the need for a firm to consider exiting an industry is when it consistently makes negative profits with no signs of recovery.
From my personal experience as an entrepreneur, I started a small event planning company when I graduated from college.  This business was a bit unique, because from the outset, I knew it was to be short-lived. Royal Affair was simply a test case. I wanted to experiment with what it was like to run a business from registering the company to creating a network of reliable suppliers. Event planning seemed like an easy choice, which would require little capital and be easy to walk away from without worrying about huge costs I couldn’t recover. 


Despite knowing this, I have to admit I did get excited about my idea and I began investing in a website, business cards, informational brochures- the works. I finally got my first client, planning a holiday party for over 300 hundred people. The event and the subsequent difficulty I encountered in recruiting new clients taught me valuable lessons:

1. Event planning was not my passion and I felt that the energy I put in was not proportional to what I was being paid.

2. I needed to set a budget for myself and justify expenses before I made them. The cards, brochures and website were relatively inexpensive, but still represented expenses which could have waited until later.
Following this, I decided to close the business and focus my energies on something more meaningful to me. I therefore began to work on Start Smart.

The scenarios I’ve discussed are just examples, there is no blanket answer to the question of when to scale back on particular venture or abandon it altogether. Each business is unique and therefore it is wise to speak with a professional on the optimal strategy to pursue. However, it is important to keep in mind that your business may not always be successful, and as a result it is necessary to recognize when change is needed.
If you’d like advice on your business send an email to startsmart.info@gmail.com
               
Visit us on the web: www.startsmartgh.com Send us an email: startsmart.info@gmail.com

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