3 things to think about before you give up on your small business idea

Calling it quits

Small businesses require a great deal of dedication and hard work to grow and thrive, but that’s rarely enough. A business also needs to be built around a good idea. And when your company isn’t doing well — when you’re not turning a profit and you no longer love running your company — one of the first problems you look to is your initial idea.

Giving up on it means giving up on the business. And that can be tough on a business owner. So, should you ever consider leaving your small business idea behind? Maybe.

But first, ask yourself a few questions.

Where are your customers?

You opened your business, you invested a ton of work into it, and you’re still not making any (or enough) money. Unless your pricing is insanely skewed and you’re losing money on every sale, your issue is finding customers. So, where are they? It’s a simple enough question, but its answer could save your company.

Market research is a cornerstone of a successful business.

 

Look at your local area and industry, and see how saturated it really is. A complex with five restaurants in it probably isn’t the best place to open up a new Italian café. An online bookstore is going to have a rough time competing with Amazon.

You need some way to stand out from the noise. Look at your competition, and try to figure out what you can offer that they cannot. That Italian café could look at Yelp, see that none of the other restaurants serve good dessert, and shift its focus to authentic pastries and coffee. That online bookstore could undercut Amazon’s pricing by buying and reselling used books from local colleges. If you find the key to standing out and bringing in new customers, your idea could be saved.

Can it be tweaked?

When you open a business, you bet on your idea. Nearly all of your business’s infrastructure will be based on it. Heck, maybe you even incorporated that idea into your business’s name and logo. Concluding that your idea wasn’t great means walking away from a serious investment.

But if you’re able to tweak your idea, you might be able to salvage the company. Let’s go back to the online bookstore. Say it started out selling textbooks. Maybe it’s even called College Textbook Emporium. But, as it turns out, old editions of textbooks are hard to sell. The owner could tweak his or her idea to offer more than just college textbooks: Maybe the company can start selling school supplies, general advice books or young adult fiction. Just a small tweak could broaden the company’s market and pad profits.

Did you give it your all?

The last thing you want to do is to walk away from your company and then regret it. Businesses do fail; it’s a natural part of the economy. But if you can look yourself in the mirror and earnestly say you tried everything you could to succeed, having a failed business will sting a lot less. Plus, you’ll feel a little more confident trying again.

My advice, if you are at this point, is to try shrinking operations a little bit and running the company as a side business while working a regular day job. See if you can spur a little growth. Businesses take time to catch on, so you don’t want to walk away prematurely just because it’s not making a ton of money. Make your salary elsewhere until you can live on what your company earns. If that never happens, you can at least walk away with your head held high — and a day job to go to.

Remember that very few businesses see a profit their first year.

 

That’s why so many people recommend saving around six months of living expenses before becoming a full-time business owner. Most of what your company earns will be re-invested, so whatever salary you do draw will be a fraction of what you could probably earn working for someone else. Don’t let that discourage you, but if you feel stuck, consider making your business a side job for now.

Then, if you are still confident in the idea, do a little more market research, see what can be tweaked, and give it all you have. And, after all that, if you still can’t turn that idea into a profitable company, you can walk away, confident you did all you could to succeed.

Image by: juhansonin via Compfight cc

Deborah Sweeney
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @mycorporation.