Being a small business owner takes an immense amount of time and dedication. As an entrepreneur, your business is your baby and you want to see your baby grow as big and strong as possible. That being said, growing your business is not always the best thing for it. Sometimes it is actually best to downsize your business in order to make it survive during turbulent times. Here are four signs that your business needs to downsize.

When Labor Cost is Too High

When you first made a business plan for your small business you surely had a certain percentage of costs that were dedicated to labor. If you are looking at your books each month and the labor cost does not correlate to your sales, take that as a sign. Labor costs that run above your planned cost will sink your business over time. Cut your losses while you can. You can always bring back more labor should the need arise.

Relationships Take Precedent over the Bottom Line

Most entrepreneurs are giving people. They give their time and inevitably their money to people they care about even when it doesn’t make financial sense. They often get the same way about their customers and feel obligated to keep their employees and customers happy by keeping their business the same size or to grow. When personal relationships get in the way of your business decisions, it is probably time to downsize and rethink your plan.

The Numbers Don’t Bear Out

When your sales are on the decline and you stop getting new customers, then it might be time to downsize your operation. This happens each year for cyclical businesses. Do not be afraid to reduce the size of your business during the slow times. It will be what keeps you open and still in business years from now.

Financial Instability

When you are having to juggle what bills to pay and when, then chances are that your business is too large. Consider moving to a smaller location, cutting back your hours, or reducing your labor costs. Many business owners have higher real estate costs than they really need.

Being a small business owner has a unique set of perks but also has its fair share of downfalls. With the help of a moving company, relocating to a smaller place is a great way to keep your business from going under. Knowing when to grow your business and when to downsize can play a crucial role in your overall success as an entrepreneur.

Author's Bio: 

Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake.