You’ll read a lot about how to start your own business online, but nowhere near as much about what to do when you close down a business. Yet that’s an experience that most business owners have to go through at some point or another. After all, around 50% of businesses close within five years.
When it comes to closing down a business, most people think about their life once it’s done and dusted. But there’s a lot you’ll need to get through before you get to that stage. There’s more to shutting down than simply closing your doors for good.
In this post, we’ll run through some essential tips for ensuring that the end of your venture runs as smoothly as possible.
Choose the Right Time
It’s not easy deciding to close down a business. Well, in most cases, anyway. It’s something that has probably been on the horizon for a while. Still, even though you may know that it’s time to close, actually making the decision often takes longer than necessary. It’s important to pull the plug once you know for sure that it has to happen. If you don’t, then you may run the risk of falling into debt (if the business is closing because of financial reasons). In any case, the sooner you decide, the faster you can begin moving on with your life.
Tell Your Staff ASAP
If you have staff, then it’s essential to think about not just how you’re going to tell them, but when. It’s nearly always best to tell them as soon as you’ve made the decision. Ideally, you won’t be closing immediately — you’ll still have weeks or months of work before you close down for good. This will soften the blow as it gives employees the chance to find alternative employment while they still have an income. Plus, it’s just the right thing to do. Nobody wants to hear that they’ll be losing their job, but if they are going to be told that, then they want it to be as soon as possible.
Sell Off Your Remaining Inventory
If you sell physical products, then it’s recommended to have a closing down sale. This will help you to recoup the cost of your inventory and provide funding for other bills that you need to pay. How you price and advertise your closing down sale will depend on the type of business that you’re running.
If you have long-standing customers who hold accounts with you, then you’ll also need to let them know so they find a new business to work with. It’s important not to leave them in the lurch.
Take Care of Legal Matters
Your legal requirements will depend on various factors, including the type of business that you’re running. It’s a good idea to speak with a lawyer to check what you need to do to officially close your business in the eyes of the law. In particular, you’ll need to know about your tax obligations and work with a company that knows about cancelling an ein, if you have one. It’s important to handle all of these issues before you forget about your company once and for all; if you don’t, then they may come back to bite you in the future.
Speak With Your Suppliers
If you have suppliers, then you’ll need to get in contact with them as soon as possible to ensure that they stop providing you with their products/services at an agreed date. Now’s also the time to pay any outstanding debts. While you may be able to pay those debts later down the line, it’s just easier to get everything taken care of before you move on.
Collect Money-Owed
You might find it difficult to get people to pay you the money they owe once you announce that you’re closing your business. As such, it’s recommended to collect payments before you announce that you’ll be closing to the public. You can offer small discounts for immediate payment if necessary. You’ll have a lot of small costs to pay when you close for good, so you’ll need the cash!
Make Post-Business Plans
Finally, be sure to make some plans for yourself in the weeks and months after you close your business. Even if you know it was the right decision, it can still be a little difficult to adjust to your new reality. Accept that you may feel a little down, find a new activity or job to occupy your time, and all-around look after yourself.