To hold on or let go: How I know when to quit

Gardy Chacha They say that business takes grit, but sometimes, you have to know when you are flogging a dead horse. Seven warning signs your business is failing 1.  You can’t pay your bills on time 2. Your customers always make late payments

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3. Your employees have a high turnover rate 4. You don’t pay yourself a salary 5. You have liquidity issues. You hold too many business assets and stock and your cash flow is bad.

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6. You pull all the weight in the business. You are the main decision maker and often make the big decisions alone without anyone’s else input. 7. You are too focused on putting out fires but not growing the business SEE ALSO :You are only as good as your team
Four seasoned entrepreneurs share what they have learnt about business longevity. Peter Macharia, CEO and founder of Jijenge Credit Limited. My third-year returns are key indicators   Peter Macharia – CEO, Jijenge Credit Limited I took early retirement after 26 years in the banking industry to start my own business. Jijenge Credit Limited – a lender that primarily offers secured loans – was born in 2014. It has been six years now and we have grown tenfold in turnover numbers. We have consistently maintained an upward trajectory. SEE ALSO :Avoid the pitfalls of marketing your business online
Jijenge has survived and is likely to grow into a bigger financial institution within a decade. Unlike Jijenge, there are a few start-ups I was involved with that I had to let go of. One that comes to mind is a business in the public transport sector. I decided to close it because the outflows were greater than the inflows. From the wealth of knowledge I have collected over the years I subscribe to the rule that a start-up ought to be making profits by the third year. This is the break-even point for a business that has potential for future growth.  If in the past three years you won’t have recovered your starting capital and already making a profit then you should call it quits. Jijenge has survived because by year three we were earning profits and could comfortably pay our bills. But profits also came because we resorted to ingenious ways of doing business. SEE ALSO :How to prevent cash theft by employees
We invested in technology such that clients could have a facility processed within an hour. This gave us a competitive edge. Winnie Ngumi is an entrepreneur of 19 years. She is the founder and CEO of Space and Style Roofing tiles. The day I lose passion is the day I let go   Winnie Ngumi – CEO, Space & style roofing tiles I went into entrepreneurship 19 years ago. The business survived and I still run it to date. Not that every day was easy though. As an entrepreneur, every day is a challenge. Even with 19 years under my belt I still face money challenges. This just goes to tell you that it is not always about money. For me, passion is the most important thing when investing in a start-up. When you reach a point you cannot explain what the vision of the business is then it is time to let go. At Space & Style we manufacture tiles. The reason I wake up every day to go to work is that I am passionate about what we are doing and the products we provide for our clients. The day I lose that passion is the day I let go. Because without passion you won’t have the will to go through all the difficulties. Tifa Research CEO, Maggie Ireri. After two years of negative returns, I decided to call it quits   Maggie Ireri – CEO, TIFA Research I started a business whose nature was in a different industry from my professional background.  I was attracted by the prospects of making money. At face value, the business prospects looked very good, but the business plan was built on the wrong assumptions of the industry. The industry suffered some shocks due to external micro-economic factors and as a result, sales and revenue prospects diminished significantly.

The business also got into contracts with clients who did not honour the payment terms, and as a result, the main problem faced was consistent negative cash-flows. After two years of negative returns, I decided to call it quits. The decision to quit was based on negative financials. However, I also conceded due to lack of passion – I lacked enthusiasm for the area of business and struggled to keep my energy levels up. I made a decision not to sink more money in a company whose performance was so weak.  From this experience, I learnt that an entrepreneur needs to know when to quit. I have also realised that I had started the business for the wrong reasons – only to make money, whereas it would have been better to open a business in an industry that I am passionate about. I am happy to say that I have now set up a company in an industry that I understand and that I am passionate about: marketing research.

Joanne Mwangi CEO, Prime Marketing Solutions.

The business can survive if you don’t dig yourself into a financial hole    Joanne Mwangi CEO, Prime Marketing Solutions There is no set number of failures before an entrepreneur is expected to quit. What many people fail to understand is that every business idea needs time. Hence the question should be more about whether one should push ahead. Every entrepreneur needs to assess the business and ask themselves: is there progress? Is the business gaining traction? What benchmarking achievements has the business made based on set goals? It is, however, important the entrepreneur does not dig a financial hole for themselves. A business could be slow hence it wouldn’t make sense for the entrepreneur to dig deeper into their pockets or take a loan to stay afloat. Passion too is important. It is what keeps you going in spite of the difficulties which business goes through inevitably.