The first time I asked myself, “Is this business worth saving?” I was a junior in college. I was sitting in a large class, working my way through a pro and con list about continuing with a business I’d already started. I was at a crossroads, a turning point. I had no idea at the time that “Is this business worth saving?” would be a question I’d ask myself throughout my entrepreneurial career.
The Turning Point
Naturally, sitting in that classroom going back and forth about whether to take the plunge and put everything into growing my small performing arts business was daunting. The crux of the matter at the time was whether or not to jump in with both feet and make this my full-time job—a big risk even for a college student.
Even though I knew I wanted to commit to the business—dance was my passion and I loved sharing it with others—I had mental battles about whether it was the right decision. Everyone around me was dreaming of college then a degree then a good job at a stable company. As part of an entrepreneurial family, however, I had a strong sense that owning my own business would lead to the kind of freedom and fulfillment I truly wanted out of life.
In the end, I made the decision to go forward and signed a lease for my new school by the end of my junior year. Sigh of relief. Decision made. I was jumping in with both feet and not looking back! Turning point mastered.
Oh, if only it were that easy.
Taking a Big Leap
As your business grows, the question of whether your business is worth saving comes with a much higher financial risk. Questions about how to market, who to hire, and when to expand can keep you awake at night wondering if all the effort and time and money you will have to invest in the growth of your business will be worth it.
About the time my business took off—hundreds of students, solid reputation in our area, and growth over previous years—we got a lot of requests from customers for an additional location in a neighboring city.
The idea of a second location put stars in my eyes. We’d be able to:
- reach more students
- help more schools, charities, and other local organizations and businesses with our success (charitable giving is a big part of our business model)
- and offer more hours to our current teachers
It sounded like a winning plan all around. At the time, profits from our first location easily covered the expense of the second, so we went forward with the expansion. The second location has, in fact, been a winning decision for everyone involved, and we turned a profit within the first two years.
However, my CPA was not happy. Expanding when it was just me in my parents’ backyard was one thing. Today, I have an obligation to provide paychecks for a wonderful group of employees. We have a loyal customer base of students who think of us like family. We are also regular contributors to our community. With this kind of increased responsibility comes increased pressure to make financial decisions that will not only put stars in my eyes but money back into the business.
My CPA brought up some valid questions I should have asked myself before expanding:
- What if the customer base in the second location had been slow to build?
- How long could I have sustained it with the income from the first location before the first location began to suffer?
In hindsight, I can see that I jeopardized the health and vitality of my business in order to expand. Yes, the risk paid off this time, but in future, I can reduce the risk by taking more time to evaluate all the potential pitfalls.
Assess Where You Are Before You Make a Move
Whatever your current cross roads, a frank and realistic evaluation of your business is always the first place to start. I’ve developed a few questions to ask yourself as you begin:
- Is the business making a profit? If so, has the business experienced growth over the last three to five years?
- Is the business model working? Is the business worth saving in its present condition?
- What is the biggest obstacle to profitability or growth?
- Do I have knowledge in this problem area or do I need help?
- Am I passionate enough about what I do to invest time and money toward correcting the problems?
I’d love to hear from you – Is your business worth saving or not?