Starting a new business is one of the most hopeful things you can do. Just like a new romance, there is a lot of excitement and endless possibility. At first, they have no faults -- courtesy of that extra thick pair of rose coloured glasses you just put on. All the numbers add up and everything can only turn out at the top end of your expectations. What can possibly go wrong? That was me, aged 25, signing a restaurant lease.
The reality was a little different and, after a while, I realised that businesses, like relationships, have their ups and downs: sometimes you love them and sometimes you hate them. The warm glow of the new slowly gives way as business life progresses to a more realistic understanding of your other business half.
Business statistics confirm that, in many cases, expectations are so sorely disappointed that the business fails. ‘Failure’ in this context is rarely an external decision, but one made by the business owner: essentially a breakup.
My Personal "Breakup"
My restaurant was an unruly child with extremely seasonal trade, fickle and demanding customers, high costs and chronic lack of capital for the 6 year journey. So many times I lay in bed at night, wide awake and stressed to the eyeballs, wondering if it would survive, or it would plummet burning to the ground. I felt like I was hanging over a cliff by my fingernails. It was hard work to battle -- the desire to ‘get me out of here at any costs’, but doing so would have meant enduring heavy financial losses.
This predicament is common for business owners with a poorly performing business. There is self-doubt, wondering ‘Did I do something wrong?’, ‘Should I try harder?’ and ‘Maybe it’s just me.’ Waiting for things to turnaround is agonising, as each week passes, sometimes improving, sometimes disappointing like the last. The waiting game is not good for mental health and if it goes on too long, you start to think your imperfect partner is not a good long term option.
Is it Time to Breakup?
Breaking up with your business is tough going. It involves a heady, complex mix of emotions and facts, tied up with feelings of failure, anger, disappointment, financial loss and reputation. It is one of the most heartbreaking of decisions you will ever have to make and not easy to sort through fact and feeling to make a rational decision. Giving up on your dream is tough.
How do you know when it’s time to break up? Only you can decide what the criteria are, how long to wait, and what your limits are. In my opinion, businesses fail because there is not enough cash to meet the business owner’s expectations. In many cases, this decision means not reaching your financial goals and (in fact) losing money, which must be weighed up against opportunity cost and your chances of making a financial recovery. All the time waiting to see if it will improve, sell the business or some easier option. Make your decision rational, not emotional and get as much independent expertise and feedback from you support network to help you through it.
Even though the restaurant tested my nerves to the absolute limit, I eventually sold it after 2 years on the market. In the end, it was worth the wait. Ultimately you can never know what will happen, so your only choice is to know yourself and your own limits. Later in my business career, I acted more quickly and decisively when a consulting joint venture was failing. After 2 years’ hard work - even though there was a lot of potential - I made the decision to break up. By that time I knew my limits.