Small businesses seem fewer and further between these days than big corporations. However, small businesses are still a very important driver of the US economy. If you currently own a small business, you may be wondering how to tell when to sell or expand your business. Or you may be wondering if it is time to shutter the doors. In this article we will look at all these possibilities and give you some facts about each.
What Do Small Businesses Contribute to the Economy?
The over 25 million mall businesses in the US employ 6 to 8 in 10 workers. They also pay nearly half of all private payroll. High tech workers are employed in this sector at a larger rate than other types of businesses. Small businesses are also responsible for many more patents than larger firms. As you can imagine, this means that such businesses are very important to the overall economy. But when the economy takes a downturn, small businesses might be denied for loans, face layoffs, or have to close. In the current economy, it’s time to go big or die trying.
When to Sell or Expand
How do you know when to expand your business? Since most business of this size only last from 5-7 years, you should think about your overall bottom line, here. When you can afford expansion and you see others in your sector doing it, go for it. Just 10 percent of growth each year can result in millions of dollars. If you are retiring, burnt out with the grind of owning such a small business, or someone offers you more than you will be able to make in the next 2 years, consider selling. Selling can help you to earn much more than soldiering on, at times.
When to Close and how to Raise Funds
Each year, more and small businesses close. Think about closing if you are losing more than you are making. At this point, your money loss is probably increasing, too. You will most likely be selling less when this happens. Loans may be stopped. But there are other ways to earn money. Venture capitalism (such as raising money online) can help. Initially, seed capital from friends, owners, or mortgage loans can help. Angel investing can also give your business a new lease on life. These funds normally come from just one person.