When it comes to running a business, one of the hardest pills to digest is that your business might not work out.
Everyone wants to try to make their business work; however, factors that might not be in your control could cause it to shut down.
We understand how much passion and effort goes into the process, but it’s better to be realistic about the company’s future and plan regarding the negative outcomes of shutting down.
This article aims to educate business owners on taking steps after their business shuts down. Reading till the end of this article will give you the insight you need to brace yourself and go about closing in the most dignified and resource-efficient way.
This may be a slightly troubling topic to digest, but it would be best if you kept these ideas in mind and planned accordingly. If your business is doing fine, consider going through this article and developing a few ideas if things ever go bad.
1. Clear your debts as soon as you can
Table of Contents
If you see things going south (or even if you don’t), consider clearing out your debts as soon as possible.
We suggest you keep liabilities off your statement because if your business shuts down, you may still be liable to pay those debts off. Unless you have LLC status, chances are your creditors will come knocking.
Unless you want to find yourself in a legal predicament, clear them out or find a good bail bondsman to get yourself out of a tight spot.
This may seem like an extreme example of what could go wrong when the business shuts down; however, there are countless examples of business owners losing everything over uncontrollable circumstances.
2. Liquidate your assets
As soon as your business shuts down, start working towards selling whatever long-term assets you can. This will help pay off whatever debts you have and work towards closing costs like rent and other utilities.
Other than that, it’s simply a way to save on storage costs. Where are you going to store all this stuff?
You will have to pay warehouse rent expenses for these belongings, so it might be better to get rid of them and bank whatever money you can.
Furniture, machinery, and other office supplies should be sold as soon as you catch wind of things not working out.
Please remember that these are things that can be bought back later. If you plan on starting a business again, you can work from the ground up and go through the process step-by-step.
3. Let the clients know
If you don’t see your business lasting till the end of the year, let your clients know that they should consider other alternatives.
If you can finish their assignments, that would be great; otherwise, you may need to pay them a portion of their money back.
Letting the clients know is a great way to keep a good relationship if you ever plan to start the business again.
The better your relationship, the more likely they will return if you plan something new in the future.
You never know; your clients could give you solutions that you never imagined. Partial investments or entire buyouts aren’t uncommon.
Float the idea, be honest about your situation, and you might receive a dose of good news that you didn’t expect.
4. Dispose of confidential documents
If you run a company that deals with sensitive information, your first order of business should be to clear the documentation. This is a tricky process depending on why you are shutting down and what kind of business you are running.
If you are shutting down because of investigations or alleged illegal activity, disposing of documents may not be a good idea.
But, if you are morally obliged to protect client/customer information, it would be best if you cleared the place out and got rid of personal data/identity markers.
It would be best to hire a short-term lawyer to guide you through this process. Certain legalities come with shutting down, and it would be best if you followed them to avoid legal complications later.
It’s bad enough that you are losing a business you struggled so hard to build, but to find yourself legally tied up is just insult to injury.
5. Let the staff know
Please do not leave it till the last minute to inform your staff about the closure. These people are responsible for putting food on the table, don’t catch them off guard and leave them at a loose end.
It would be best to tell them in advance and give them a chance to find a new job while they still have time. Most employees would honor this and continue working till the business shuts down.
If you don’t tell the employees in time, they could either unionize or take legal action. The business shutting town is the best time to play it safe if there ever were one.
There it is. These are some of the best steps you can take when you see signs of your business shutting down.
It’s going to be hard, there may be 101 things rushing through your head, but you need to take your time, clear your head, and get to work. The longer you spend grieving, the more likely a bad situation will get worse.
Consider whatever makes sense to you from this article and start acting on things before it’s too late. You need always to keep your and your loved ones’ interest first and ensure that you have a safe future ahead of you.