SMALL TALK MAY 17, 2010
Colleen DeBaise answers an entrepreneur’s question about when to call it quits
Q: I’ve owned a small clothing boutique for three years. I weathered the economy, but now a
construction project that will last three months has blocked foot traffic to my business. This is
killing my cash flow so much that I had to
delay paying my rent and my sales tax. When do I call it a day?
—Susan, Burlingame, Calif.
A: Fighting for survival is never easy, but keep in mind: If you don’t pay sales tax, the state could shut you down.
When that happens, “you lose control—and that’s even more frustrating,” says Jerry L. Mills, founder of B2B CFO
Partners LLC, a Phoenix firm that provides part-time chief-financial-officer services to small businesses. So,
direct any reserve funds toward the payment of taxes as a first step in getting out of an already bad situation.
After that, place a call to your insurance agent, and see if your business owner’s policy includes business-
interruption insurance, which generally kicks in when natural or man-made hazards threaten your company. And
while it’s best to avoid legal action, you might consider contacting an attorney to see if you have any recourse
against the party—be it the city or a next-door neighbor—who’s jackhammering. Given the situation, you might
also be able to negotiate a lower rent from your landlord, especially while construction continues.
As far as deciding whether to close up shop, you should perform a simple cost-benefit analysis, looking at whether
the positives outweigh the negatives if you remain open for six more months, Mr. Mills says. If it looks like you’ll
sink further into debt, damage your credit score or—perhaps worst of all—risk losing personal assets, such as your
home or retirement savings, then it might be wise to call it a day, he says. You might seek the advice of an
accountant, who can help take some of the emotion out of the decision.
—Colleen DeBaise
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