When Should a Failed Business Shutdown Operations?

[Spencer]

Cash flow is king in any type of business endeavor and running a business that is not cash flow positive is equivalent to swimming upstream, the wave is against you unless you have a plan of covering your costs as time goes on with your model.

The moment a business owner realises his expenses are bigger than his revenue, he should endeavor to find ways to mitigate that before closing, if efforts did not yield anything positive, you can try to sell the business, getting buyers might be hard or easy depending on the industry you are in and if it didn't work then consider to close off to terminate the burn rate.

 

[Mika]

Some people manage to build their failing business into a profitable business, where as some people ultimately get into debt when business fails. What should you do with a failing business depends on what your priorities are how your financial conditions are. If your debt is becoming overwhelming and you are unable to pay back your business loan, you can liquidate your business and what ever you make after liquadition can be used to repay the loan