Businesses should be closed in a manner prescribed by the regulating agency. If there are requirements to successfully open a business, there are requirements as well in closing it. This phase, which is admittedly the hardest for any business owner should be given proper attention to avoid future problems.
Closure is inevitable for businesses which are unable to earn sufficient profit not only to keep it going at break-even point but also to have sufficient surplus to carry out improvement plans for the business. A business that is allowed to stagnate will inevitably travel the road to business closure anyway. Delaying warranted closure can result to unmanageable losses. Sometimes, it is wiser to cut the losses while still in manageable levels.
There are tell-tale signs that a business is heading for possible closure unless reverted. When the amount of debt continues to rise without proportionate increase in assets, the business is probably losing actual money and not just in the accounting forms. During the initial stage of business operation, losses usually cannot be avoided but there is a point where this should stop and the business starts to earn profit. If loss is declared year in and year out, there isn’t much sense in continuing the business. This is unless of course if the owner is in business just for the sake of it and is just thankful to have something to do. Strictly speaking, this cannot be called a business.
A merchandise inventory that has remained unmoving for quite sometime is telling its owners something. So does lenders who reject their loan applications. It is highly possible that they are seeing what cannot be seen by a business owner intent on continuing the business. Sometimes, it takes an outsider to see the obvious.