The moment may come when you will consider whether remaining in your business makes any sense for you. That day you may question the industry perspectives, your company, your own preferences.
When the decision is made to quit, different scenarios may be played out. Your company could go bankrupt, you may decide to close down your business, or you may be selling it on a specialized Exchange marketplace. Despite the variations, there are people involved – the people who will be touched by your decision and the ones who will just observe. Whatever the relations with people are, you should take care of the business brand and your own reputation and quit the game gracefully. Below are some tips that might be useful for you.
Plan The Shut Down
The decision to quit business is just the first step you take on a long road, especially if you decide to shut the business down. There are millions of issues you should take care of liquidation of assets, your employees, creditors, and so on.
Such a process is anything but pleasure. It may take a great amount of time and even more of your energy. The good idea could be to get professional help from the law, business, financial consultants.
You might be interested in the article “Steps to Closing a Business,” which gives information about termination documents, how to cancel licenses and company names, how to act accordingly to labor and employment laws, and how to keep all necessary documentation.
The IRS Closing a Business portal provides some resources that might be of help to make sure you avoid tax-related mistakes that could be quite costly.
Create A Strategy
- Consider all people who will be affected by your decision (staff, customers, partners…). Try to see from their perspective the effects of your decision, that will help you build the exit strategy that will be well-perceived by all stakeholders.
- When creating a strategy, it is better to think about the transition of all of the groups you defined as stakeholders.
- Remember that people sometimes do appreciate honesty. There is nothing wrong with going bankrupt or quitting your business just because you don’t think it is the right path for you at the moment.
- It could be also nice to keep in mind that bad reputation closes doors and may follow you long after your decision is made, so the more you take care of stakeholders, the better your way out will be perceived.
Outstanding Accounts Matter
In the best-case scenario, you should have a proper strategy to aggressively collect payments on any outstanding accounts before publicly announcing your business’s closure. The way to do it is to consider discounts on immediate payments or calling the account manager directly.
Close Financial Accounts, Distribute Assets
After all the necessary payments are done (taxes, payments to employees, debts) you may wisely distribute the remaining assets among yourself and other partners or owners.
Then the business account gets closed and credit cards associated with the business get blocked.
Alert Customers, Begin Closing Accounts
Customers would appreciate it if you could warn them within a reasonable time so they can begin taking alternative measures. Closing a business could be a challenge not only for you but for clients who are used to getting your goods and services.
Let Your Staff Know
Employees should be warned as soon as possible. In the best-case scenario, they should learn about the business closure from you and not anyone else
If you’re looking at mass layoffs, it is a good idea to make sure you do not violate labor and employment laws, by not making proper payments to employees after the closedown.
In general, if you hire more than 100 people, you will need to give at least 60 days’ notice before closing down and giving notice of mass layoffs.
For more information, you should see the U.S. Department of Labor Employment and Training Administration Fact Sheet.
Consider Bankruptcy Options
Hopefully, when closing your business, you can avoid declaring bankruptcy. However, that is not always possible. In many extreme cases, you may need to consider filing for bankruptcy. And that is another headache. You might be interested in the Wall Street Journal’s article “High costs of rescuing a failed business” which provides examples of expensive small business bankruptcies that cost between $100,000 and $600,000.
Consider Law Consultancy
Going through the business closure process is a tough journey that can go easier and less painful with professional help. Sure law consultancy costs money, but it could save you more than you may think. Experienced lawyers know exactly which path would be most cost-effective for you, how to avoid law violations (that can be costly), how to deal with all the document routine. Do not underestimate your nerves and time. The business closure is the end of the chapter in your life and you will need the energy to start the new one.
Take Time To Mourn
In case business closure is not a profitable deal or a part of your planned transition to a new place, you might wake up with nothing but thinking nothing on your mind but thought about your failed business.
Then, as experts say, you are likely to go through the same five stages of mourning and grief that people everywhere are experiencing: denial and isolation, anger, trade, and depression.
The five levels of grief for a failed social entrepreneur link these stages directly to businesses’ failure, with little difference:
- Picking yourself up to start again
Those stages can go differently for everyone. They may take different time and bring sour emotions. The 24-Hour Trick for Getting Over Failure from inc.com suggests that it would bring relief if you spend one day purposefully focusing on your failure. It includes the time to cry, curse, scream, sulk, and otherwise plunge into grief and self-pity. As if you want to go through all of the mourning in 24 hours and rush to experience all of the emotions and all the pain.
Move On With Your Life
Now you are free. You quitted business. Try to focus on what roads it opens for you rather than staring at the closed door. It could be a good idea to take time and think about what you want to do next: start a new business adventure, join the existing company, or even start making art.
The Harvard Business Review, Strategies for Learning from Failure, examines how companies learn from failures and identify effective and ineffective approaches. It discusses “the right way to think about failure,” which may put you back on the path to future success after you close your business.
To Sum Up
More and more people are attracted to the business. The truth is, many companies do not get to the “growth” stage and fail. The times are especially rough for businesses now, during the pandemic which brought an economic crisis we will deal with for a while.
Business failure is only one of the possible scenarios when you may consider quitting the business. More pleasant stories happen as well. For example, after long years of successful business management, you decide to retire or (who knows?) drop everything and start a new life in Bali.
Whatever the case is, your way out of business should be planned, smooth, and graceful.