Business · Business Analysis

How do you know that your business is dying?

kishor fogla CoFounder and ceo at Yellow Slice

May 5th, 2017

There are many times we are in our fancy and hope to make good money and name. But suddenly the business you are in dies either because of the industry, technology, people or just because you didn't perform well. How do one keep a check on his performance?

Joe Albano, PhD Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.

May 5th, 2017

I know that many people would like a simple go/no go test for this question. The definitive answer to the question: "Should I continue to pour in blood, sweat, and far too many tears; or is it time to call this a 'learning moment'"?

Then there is the "three feet from gold" school. Those who say NEVER give up because you just might be at the edge of something big.

The reality is that there is no definitive answer. The best method I have found for making this determination comes from the Business Model Canvas, Lean Startup, and all of the other evidence-based decision making approaches to startups and entrepreneurialism.

It boils this. Every successful business needs to do three things: create demand, build a fulfilment system, and manage the money. Startups are the process of making assumptions about how each of those functions will perform in your business, testing those assumptions, then adjusting your model until it aligns with reality in a sustainable (usually that means reliably profitable) way.

If you can't make that happen, it's probably time to quit. The number of "pivots" you are willing to take and the alignment between your model and reality (it's never 100%) required to continue or stop are up to you.

Brent Laminack Principal at OpenFace Systems, Inc.

May 5th, 2017

Before you can tell if something's sick, you need to know what it looks like when it's healthy. You need objective measurements of your business' health. These are generally called Key Performance Indicators (KPIs). They are slightly different for each business, but some are: Total Revenue, Net Profit, Cost of Sales, New Clients, Client Retention, etc. See some others here:

Then you check and probably graph these on a monthly basis. Do analysis: are the numbers trending up or down? Which KPIs lead the others (e.g. New Customers)? Which way are they going? The main thing is to be objective. If this were somebody else's business, what would the numbers say to you?

Dane Madsen Organizational and Operational Strategy Consultant

May 5th, 2017

Do a brutal self assessment as to why you fear this. If it's the space, see and test if you are right. If it's your product, you will learn more from people that did not use your product again. If it's people, why? It may be you have a space issue so think about other places to apply your skills. Many companies started in one business and ended up in another, including Google and Amazon. If your issue is product, you can solve it but you have to never fall in love with your technology. If you do, you will defend it to you own demise. If it's people, is it that you hired weak people or toxic people. Both can be fixed, but you need to know what the issue is and get people that "fit" instead. You can also seek different countries that may have a different development environment. ultimately the business dies only when you stop iterating .