Thursday, 3 May 2012

When to fold an unsuccessful business idea

Last year I started book review website (Investor Book Review) as a site which I hoped to build up into a resource which people could use (for free) to read reviews on investment and business related books because there were so many books out there and there was no site which gave feedback for this.

It was not strictly a 'business' in the strict sense of a trading for profit business but it is something I hoped I could build up and eventually monetise.  However after several months of virtually no traffic and a whole lot of effort (it takes some serious commitment to even upload one review a week as you need to read, digest and distill often quite complex books in a short period of time) I stopped putting in the required effort on the site.

I let the website sit for a couple of months though as I mulled over whether to give it another go or whether to scrap it altogether.  Matters came to a head a few days ago when I received my renewal notice from my web hosting provider.  Letting the site was one thing but shelling out more cash for it was another.

This made me consider the issue of when should you fold an unsuccessful business idea?  There are a couple of obvious scenarios and some which are less obvious
  1. When you are losing money
  2. When you are putting in a lot of effort and not making money - your time is valuable too!
  3. When it becomes a headache for little benefit.  Starting a business is not easy and you should expect headaches along the way but if there is no return on the horizon it is time to re-evaluate your options
Before you fold your business you need to:
  • Give it a sufficient amount of time to get off the ground - killing it quickly because of a lack of immediate response is short sighted
  • If you are not enjoying yourself give yourself time for the 'bad period' to pass.  There is no use being in a business or even in a line of work for that matter if you hate waking up in the morning and committing to it
  • Work out how much it is going to cost you to close down your business.  Often there are rules / guidelines you need to follow depending on your jurisdiction.  This is especially true if you have offered warranties on products or if your personal reputation is on the line for something you have provided or already sold.  For an Internet based, information business like a blog this is not something which is really an issue
  • Save any intellectual property you have created.  For my book review website I am going to take down those posts and re-post them on this website (which as an aside I actually enjoy updating a whole lot more and have had reasonable traffic through since I started it)
The issues involve get much more complex (and emotional) the longer you have been involved with the business, the more things you have given up for it and if you have employees which you feel obligated too.  There are lots of things to consider and it should not be done on a whim.  If you have any other tips for people looking to close down a business please add them below.

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