Kevin O'Leary Has This Simple Rule for Small Businesses

It's advice worth heeding if you have a business you're trying to get off the ground.

Starting a small business can be challenging. And keeping a business running smoothly is no easy feat, either.

It may take some time for your small business to get off the ground. In fact, as a general rule, it's a good idea for small business owners to have plenty of money in personal savings before launching their ventures. That way, if it takes some time to turn a profit, there's money on hand to pay bills.

But what if your business happens to be taking a really long time to turn a profit? At what point do you switch gears or even give up?

There's really no hard-and-fast rule when it comes to pulling the plug on a small business that's struggling. But if you ask Shark Tank personality Kevin O'Leary, he follows one basic guideline in that regard.

It's three years or bust

Kevin O'Leary is no stranger to successful businesses. As a Shark Tank investor, he's backed numerous ventures and has clearly seen his share of mixed results. And he says that there may come a point when it's time to acknowledge that a small business idea just isn't working out.

That point, he insists, is three years. In fact, in a recent Tweet, O'Leary said "I have a very simple rule in business. I give any business or idea 36 months to prove its value. If it hasn't after 3 years, it's a hobby, not a business."

O'Leary has a point. If your small business is hemorrhaging money and not succeeding, you can only pump so many resources into it. Plus, keeping a struggling business open for years could be bad for your morale. So if, after three years, your business has yet to make money, or has yet to really take off, then it may be time to either convert it to a hobby and earn an income elsewhere, or even give up on the idea altogether if all it does is cause you stress and not bring you any joy.

Does it ever pay to pack it in sooner?

O'Leary is clearly a fan of the three-year rule when it comes to small businesses. But what if it's been 18 months and you keep losing money left and right? Should you push yourself to hold out for another 18 months and see if things improve?

At that point, whether you push forward or not will depend on different factors, including your financial resources and situation as well as your stress level. Some business ideas just don't pan out, even if they're good ones. If you have enough money to get by and can give your business more time to succeed, then you may want to stick with it. But if there's zero money coming in and you've depleted your personal savings, then it may be time to move on and pursue another means of earning a living.

Remember, one failed small business doesn't guarantee future failure. And sometimes, abandoning a venture that isn't panning out can pave the way to better opportunities.