If you’re an entrepreneur, you already know How to get a DBA for your company but have you ever spent a single second googling best practices for shutting down your company.
I know I didn’t.
Nor did I ever intend to.
It is basically the antithesis for business growth. And, the topics that you don’t go searching for are often the most difficult to face, such as, how and when should you fold up your business.
I’ve come to learn that every business has a life cycle in which the end is inevitable. The real variable is HOW it ends: a successful exit, a change in leadership or ownership, planned succession, a necessary buyout, or just plain ol’ calling it a day. And, even the best case scenario will come with an emotional price tag.
As a member of the greater business community in startup land and otherwise, I’ve witnessed these endings in their various forms: acquisitions, mergers, pivots, and shutdowns. In each scenario, you will find someone at the helm navigating rocky waters while riding an emotional rollercoaster, doing what they think is best for their people and their company.
That is what I did too.
Almost four years since I mapped out my business idea with coloured sharpies on a piece of cardstock, I was faced with a really tough decision.
And, on the day that I threw my last iron into the fire, I sat down and asked myself the hard questions I was avoiding. The answers to these questions were hard as hell to admit, but as soon as I became honest with myself, they were loud and clear. I discovered that closing up wasn’t just the best decision for me, but it was also best for my investors, my team, and my family.
In case you find yourself at a similar crossroads in business, or in life, I am going to summarize the hard questions I forced myself to answer and, I encourage you to be honest with yourself if you find yourself in a similar place, needing to answer them too.
Question 1: What is the business costing you?
There are a few ways that a business (or another life endeavor) can cost you.
Yes, the obvious one is financial cost, but there are also less tangible expenses for running a business: emotional costs and opportunity costs. If you are here looking for the quick reason why I decided to shut down my business, the short answer is this: all three came up red.
The business was costing me financially, that was definitely a daily stress, but keep in mind it also isn’t uncommon for companies to run a deficit in the early years. To put it frankly, if the cost of running my business was only financial, I wouldn’t be writing this post today.
Emotionally, it was killing me to see a team of dedicated, hardworking and talented people not receiving the type of opportunity I had envisioned for them. My big hairy audacious vision wasn’t panning out, and as time went on, it seemed to be slipping further and further from reach.
And then, there was the opportunity cost. In the past year, my photography business grew faster than ever before. In fact, while one business was racking up costs, my photography business was racking up revenues. This one-woman show hit over 6 figures in revenue by the end of Q3. I was so caught up in everything on my plate that I hadn’t even noticed this milestone until months later. The only thing I was aware of during that time was feeling like I was being pulled in way too many directions. I thought I had set up my retail business in a way that it could run without me, but it really couldn’t. It needed me financially and physically. I kept getting pulled back into it which meant time and brain space that I needed to serve my growing photography business was being spent elsewhere. And, the opportunity cost was twofold because I wasn’t fully present in either business which meant, both were suffering in some way without me.
“I was never going to be able to shoot either business for the stars nor properly serve my team and customers while being spread so thin.”
And let’s be clear, I don’t know a single entrepreneur that doesn’t make sacrifices to run their business. They pass up personal finances, family time, self-care, and they let every spare minute they possess fill up with the demands of running their businesses every single day. Because of this, you need to be crystal clear with yourself on how much sacrifice is too much for you and the people you care about.
Question 2: How does the cost-benefit analysis weigh out?
It is no secret that entrepreneurs are hard-wired to take risks and make sacrifices. Why? Because we are motivated by big sparkly shining objects. It might be a blue-sky financial opportunity, it might be a flexible schedule, the chance to make a big impact, the freedom to change, ultimate control or maybe it’s just never having to spend another day working for anyone other than yourself. Whatever it is, there is some big benefit that you are chasing after and it damn-well better outweigh the costs or you will find yourself fighting a daily battle that you’ll never win.
That big shining object for me was being a part of something that I created and was proud of, including the amazing team that I had assembled and the desire to serve and contribute to the vibrant city I live in and love. These were definitely the toughest things to let go of. It took one of my best friends to point out to me that my team members are highly employable and they’d be fine, and that our city and customers would be A-OK too.
Grappling with the loss of something that I had created and am proud of was so hard. But my photography business was growing fast, and I know in my heart that it needed all of me.
If you are in a similar place, I encourage you to ask yourself, are the benefits you gain from running your business enough to outweigh the costs? Is the big shiny sparkling object in your business enough? Also, what big sparkly shiny opportunities are you neglecting while you keep your business running?
Question 3: Do you pass the regret test?
The ‘regret test’ is something I learned in the early years while cleaning out my closet, way before the ‘spark-joy’, Kon-Marie craze. It is not dissimilar, it goes like this: if you throw a particular clothing item into the donation pile, immediately assess your feelings of regret. If you feel regret, how intense is it? How often do you anticipate having this feeling? Will you feel it several times a week, or just once and then likely never again. Be realistic, then decide to toss it or keep it.
Can you imagine a regret-free life after your business is gone? If you walk away from your business, how much anguish do you think you will feel? How long do you think you will feel it for? How often will you feel it? How does it fair with the rule of 10-10-10? For how long and at what volume will the ‘what ifs’ occupy your thoughts?
Up until a few months before asking myself these tough questions, I would have failed the regret test. I could sit and imagine all of the potentials: the things I didn’t do, things that I could do differently, new possibilities, alternate directions, unchartered territories to explore and things to try, the ideas and possibilities felt endless. The growth and the learning were vast and I was high on motivation and prospects.
The likes of Poshmark, H&M, and Zara had nothing on my destiny.
When the time came to make a decision, I knew in my heart I was done. It was sad and difficult, but it was also a pretty big relief knowing that I had thrown down my last gauntlet. I had given it my best. I took some time to untie each heartstring, cry a little, and move forward.
If you’re in a place where you couldn’t walk away from your business without feeling regret, I would encourage you to ask yourself, why? Is there more you can do? Is there still something left for you to try? Is there a big opportunity, target or milestone within reach? Is there something else you want to accomplish before you call it a day? If you still feel that there is something that can be done, get back in the ring and fight like hell. This is the type of thing that glorious renaissance and success stories are made of!
Confronting the end is quite possibly the toughest entrepreneurial endeavour I might ever face. But I believe it is as much a part of being an entrepreneur as anything else and I wish that we talked about it more. There is no shame. There is definitely no regret. People make changes in their lives all the time, we accept new jobs and start new projects, and it’s perfectly ok. Actually, it’s better than ok because we showed up, and we tried something we believed in, we learned and we grew. Yeah, we might fall down a little, but quite honestly that’s the only way we’ll ever truly learn that we can stand back up, too.
In this case, the ending turned out to be one heck of a best-case scenario. The acquisition of Ella The Shop by the growing retail tiger @BoutiqueZekara is the best possible outcome I could have ever dreamed of. I remind myself daily that this final stance was well worth all the faceplants it took to get here.
[Related: ELLA The Shop Launches Memorabilia Line ]