Should You Throw in the Towel?
Q: In 1996, after 15 years as a health-care administrator, I built and opened a child-care facility. I knew the first few years would be difficult financially, and therefore, I planned for that.
However, in a break-even mode in the fourth year, I raised my prices for the second time in two years to cover escalating expenses (salaries, food, gas, etc.). I lost 25 kids as a result, thus throwing me back into the red. I have not been able to recapture those lost students, and I continue to hemorrhage red ink, despite advertising.
Last June, I decided to sell, or lease, the building. Thus far, I have been unable to sell the business, which I have listed with a reputable broker. I am considering closing the business and trying to sell the real estate. I have lost all desire to keep the business at this point. What do you recommend?
A: You've got to give yourself lot of credit for keeping good track of your money. Most business owners are in denial when it comes to their finances. They think that if they work hard and try to be of service to their customers, the money will take care of itself. But that's just not true! So congratulations on working with a business plan and a budget and having a known financial position.
Still, at both lower and higher prices, you lost money. It doesn't seem fair, and it isn't. People are incredibly bizarre when it comes to spending money. (Imagine being cheap about child care!) Here are your options at this point:
- Give it one more shot. Figure out a new and powerful way to market your child-care facility so that price becomes a nonissue. The price is always too high until the value is established. I recommend The Wizard of Ads: Turning Words into Magic and Dreamers into Millionaires by Roy H. Williams and Selling the Invisible: A Field Guide to Modern Marketing by Harry Beckwith. I'm convinced that people will buy at a significantly higher price than the going rate if you can tell them and show them why you're better, cleaner and more loving than the competition. If you want to stay in the child-care business, you must become a master marketer.
- Give it up. Stay in this business only if you really want to. Take time for a personal retreat to determine what you want. Talk to your mentors; keep a journal; even meditate if it helps you make your decision. Ask yourself these questions: What else can you do? Does child care really make your heart pound, or are you clutching at straws? The world is full of opportunities. What's your purpose in this lifetime?
It's possible to be successful in any field-but how bad do you want it? Key into your life's purpose, and you'll find the courage and energy it takes to stand out from the crowd...and be really successful.
Every business experience teaches lessons. The game is to win more than you lose ... not to never lose. Good luck to you, and keep me posted.
Author Ellen Rohr nearly starved in her family's small contracting business-until she learned how to manage money. "Do what you love, certainly," she says, "but the money won't just take care of itself." Ellen's pricey college education didn't prepare her for real-world business. "Financial business basics aren't that difficult...but where do you learn them? Unfortunately, business literacy isn't taught in school. I teach the basics and take the mystery out of making money." Ellen's mission as an author, columnist and seminar leader is to help people make a living doing what they love.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.