If you must close, its far better to close with a small loss than to hang on and end up in bankruptcy.

6. Prepare for Success

Now lets assume your business succeeds. Why shouldnt it? After all, youve planned carefully and worked hard. When it happens, be sure you relax and enjoy your success for a while before you think about your next step. Everyone needs to know how to take a vacation, especially small business owners.

If youre considering expanding, first take a long look at your business and your personal goals. Many wise people would rather make a decent profit with a small business than deal with the headaches of a much bigger business.

Let me illustrate this point with the story of Fred and Fritz, who opened a breakfast restaurant several years ago. After they learned the ropes, they made a good profit. Best of all, they went home every day at 3:00 p.m. Then they opened a second breakfast restaurant and things were was less than half of what was expected at the two new ones. Within two years, they both lost their homes as well as their businesses and were back to working for someone else. Not surprisingly, their new bosses thought it unreasonable for employees to go home at 3:00 p.m.

Axiom: Bigger is not necessarily better.

Advice: To make your business bigger, plan as carefully as you did when you began. Resist the urge to over-expand. You will very likely continue to do well if you expand slowly and sensibly.

C. Getting Out of Business

What if your business is losing money and youve already scaled down your expenses, tried innovative marketing techniques and made sure you have a high-quality product or service? Youll need to either fundamentally change your business or get out of it. Youll be wise to make these tough decisions promptly if you keep losing money. If you decide to get out of business, you have these basic options.

1. Lock the Doors and Leave

Disappearing is almost always a bad idea unless you plan never to come back. Walking out creates more problems than it solves, not to mention the hassles you will cause your landlord, your lender, your other creditors and your friends.

2. Sell the Business

This may be a realistic option if your business makes a small profit, or sometimes even if it doesnt. Someone else may be satisfied with less than you are or may have visions of how to make a better profit.

If you cant raise enough cash to pay your creditors and they arent willing to take less than the face amount of what you owe them, you may have to declare bankruptcy just to get rid of the business. (See Section C5, below.) Or, if youre lucky, you may find someone willing to buy your business and try to turn it around.