The statistics are out there—according to the Small Business Administration, seven out of 10 businesses last two years, and half of them will last five years. So while the odds are in your favor in the beginning, things can take a turn for the worse quite quickly after that.
If your startup begins to head south—whether it stops being profitable, requires too much time, or you no longer feel the same about the work—there are things you can do to remedy the situation. But you should first identify the source of the problem. Here are a few potential causes from Business Know-How.
1. You started your business for the wrong reasons.
Did you start because you wanted to make a lot of money? Did you decide you didn't want to be accountable to anyone else? These might be tempting reasons to throw your hat into the entrepreneurship ring, but they are the wrong reasons.
2. You're running out of capital.
Money keeps the wheels turning, but yours have ground to a halt. How realistic were your expectations on revenue and capital? Is it time to reassess and cut costs where you can?
3. You didn't plan properly.
This is a problem on its own, but it also compounds problems that are already there. Make sure you know specifically what need your company meets. Did you not think about what problems you might run into along the way? The short term is obviously important, but if you're not figuring out ways to make sure you're still around this time next year, that's bad news.
Here are steps you can take to combat each of these problems.
If you feel that you started your business for the wrong reason, you need to do one of two things. You can sell, which is an immediate fix that wipes the slate clean, setting you free to move on to the next project. Or you can adjust your attitude. Figure out how to be okay with not making shopping carts full of cash right away. Figure out how to deal with being accountable to others, like customers or business partners. This is certainly the harder of the two options, but owning your own business is rarely easy.
If you're running out of capital, you have two choices as well. First, you can court more investors to raise a new round of funding. If you go this route, be a tightwad. Save every cent you can and stretch every dollar until you turn things around. If your business is a sinking boat, think of the money as buckets for bailing out water—you want each one to be used to its maximum potential. Second, you could consider pivoting. What's a new business model you could adopt that occupies a related space but has lower operating costs? If you're skeptical about pivoting, remember that big names like Twitter, Groupon and Flickr all started doing something completely different.
If you didn't plan properly, then you might do well to sell or disband. Planning is essential, and if unexpected problems are popping up (or worse—the same problem keeps popping up over and over again), this might be a sign that your business is in the wrong space or that you should start out doing something on a smaller scale with less risk involved.
It's always scary to see numbers head into the red. But if you plan and have a good head on your shoulders, you can pull yourself out. And it will only be a learning experience that will make you a better businessperson.