If your business is not doing well and keep going into loss, closing your business might be a better step to take in order to protect your business from future crises.
However, it can be harsh for almost every businessman to close down their business. But for some reason, they have to.
Closing a business is more complicated than starting a business. If you walk out without fulfilling requirements, you may risk legal disputes and unnecessary fees. But don’t worry, in this article, you’ll go with a step-by-step to get shutting down your business.
How to Close a Business in 7 Simple Steps
Complete these seven steps and make your business close down.
If you’ve to close your startup at any cost, decide first whether you should end up with all the things or not.
Avoid taking any step that can be the cause of regrets.
If you’re a solopreneur, you can decide on your own whereas if there is an existing partner, it requires him to agree.
2. Create an Exit Strategy.
An exit plan ensures a business owner’s well financial future.
In order to create an exit strategy, prepare your personal and professional finances. Consider different exit plans and choose the best option.
Approach your company investors and speak to them–your exit strategy should advise them on how they’ll be repaid.
After that, consider getting help from tax professionals, bankers accountants, and lawyers.
Making an exit strategy before shutting down a business can help one navigate the closing process smoothly.
3. Cancel All the License.
Business permits and licenses, registration, trade name–cancel all of them.
It will help you to protect your reputation and finances.
Related: How to Get a Business License
4. Notify Your Employees.
When your closing plan will be in place, tell your employees about that step you’re going to take regarding your business and prepare yourself to answer their questions.
Your staff should be aware of what’s happening in the company because you could face difficulties completing some last pieces of work, like selling your assets, if your employees don’t know anything.
It should be included in your strategy that how you will manage communication with the employees.
It’s the process of closing a business and redistributing its assets to the shareholders–the men who invested in your company.
The best method to perform liquidation is to sell assets as soon as possible. It’s a pretty simple process that you can get done with quickly. It includes inventory, equipment, and real estate. In addition, before paying yourself, pay your creditors, if any.
The other method is to liquidate your business over time. In this way, you’ve some cash flow to maintain your state (lifestyle).
6. Sell Your Business to the Someone You Know.
It’s not necessary to sell your business. However, you can think about selling your business rather than closing it.
If so, consider someone you know. He can be an existing partner, an employee or a customer, or even a family member.
In this way, you could maintain an income while he can begin to run the company without any initial investment.
You can also consider becoming a mentor during the transition, which makes the process smoother for everyone.
7. Inform Your Customers.
Last but not least, inform your existing customers and clients about the closing of your startup, or it’ll remain to continue with a new owner.
If you’ve sold your company to an individual, introduce him to your clients.
If not selling, you can give your customers the best alternatives present in the industry right away.
Make a Long Stroy Short
- Decide to close your business. If you’re one of partners, make sure to convince others to do so.
- Create an exit plan and approach your company investors. Speak to them on how they’ll be repaid.
- Cancel all the licenses you no longer need.
- Tell your workers about the closing of your business.
- Perform liquidation process. Sell all of your assets.
- Prefer selling your business instead of shutting it down. Although, it’s not mandatory.
- Inform your customers and give them the best options.
It’s not easy for an entrepreneur to close the business he built working day and night. He would have set many life goals that he had to accomplish.
Life is so unpredictable. We should not lose hope. You never know which moment turns to be the best.