When it's time to quit

While most owners soldier on, sometimes there’s no alternative to shutting shop

- Anthony O’Brien

Many businesses experience peaks and troughs, and according to the Small Business Association of Australia, 20%-40% of companies across most industries are in trouble because of 24 months of upheavals spawned by Covid-19. When times are tough, how can you tell whether you’re going through a cyclical trough or a terminal decline?

Anne Nalder, founder and CEO of the Small Business Association, says recognising a terminal decline varies depending on the business. “Like in life, business goes up and down. Yet one of the biggest mistakes is being too urgent to close a small business rather than looking to see if it can be restructured. After all, a big business won’t shut down just because it hits a speed bump.”

Cash flow and profits

All small business owners aim to have decent cash flow and make a profit, so it might be time to pull up stumps if neither is happening. “If there is insufficient cash flow to meet the demands of the daily running of the business, or you can’t pay your creditors even if they agree to payment terms and the market has dried up, it might be time to call it quits,” says Nalder.