How to Know When to Close a Home-Based Business

Should I close this business? It's a painful question to ask yourself, whether the business is home-based or traditional. You've worked hard and have done everything you know to keep the business afloat, but all the symptoms still seem to tell you the business is failing. It's hard sometimes with such a strong emotional tie to know whether to keep moving forward or cut your losses.

I want to walk you through some ideas that may help you decide what to do. The final decision is yours, but it always helps to have an objective person look at the situation. I do suggest you do that in addition this article, not with just any objective person but with people who understand business. The following are general areas of business you need to look over on why the business isn't functioning correctly:

1) Find out if the failure a debt issue you can't fix.

The immediate picture that comes to my mind is when people go into too much debt to try to make a business work. Interest payments end up offsetting any profit to the point you never get ahead. Your overall idea may have been sound, but you have to picture debt as dropping water on a fire--eventually the flame is going to go out.

You also never want to get to the point where you're leveraging your home, 401k, or any other assets to make a failing business work. People create businesses to help them financially, not harm them. It's easy to forget that sometimes when you feel in the middle of it all.

2) Determine if you have a cash flow issue.

There are also situations that there just isn't enough of a market for the product or service to be worth your money and effort. Your income simply isn't going to catch up with your expenses no matter how much you put into it--there's this feeling like you're spending $1 to make 99 cents over and over. Unfortunately, a slow leak is still a leak. The only way to turn this around is to fix the expense side of things.

3) Is it a time issue?

If you're in a position where you're having to work a lot of hours just to keep the business afloat and sincerely don't see any hope of changes, you probably need to still shut the business down just for the sake of your health and sanity. That's usually a personal call to make, but just realize that your time may be better spent on another project.

4) Lastly, are you only going on because of emotion?

None of us like to fail, but there are some cases where shutting down may be your best option until you can recover and try again. Something I've never seen factored into business failure statistics the people who keep trying-sometimes it just takes a few failures to learn enough to be successful long-term. Most successful people have failed more than the average person in their field. They learn from the experience and move on to better things.

Additional Tip:

• Either way you decide to go, just don't let fear or denial of the situation rule your decision-making. Confront the situation head-on to either change its course or let it go. It's the best thing you can do for yourself and your family.