eBusiness Weekly
The situation for small business owners in the country has reached another level.
Suppliers are inconsistent, pricing is near impossible and customers have not much money to spend on goods and services.
Many will have done the right thing and tried to keep up with the dynamic economic environment by constantly revisiting the business model, but still find the going tough and see no return on money. This may necessitate shutting down one’s business entirely. This article will highlight the indicators that one must recognise when it is time to fold, and the important steps to take towards shutting down a business.
It’s a known fact the world over that the majority of businesses fail. By the third year of operation, if a business has not taken off and one has tried everything, then it may be time to call it quits. The whole point of business is making a profit so if this is not happening then it may be time to stop. Perhaps one may be at the point where they are now putting in personal funds to keep an enterprise afloat.
There is a limit to which this makes sense and so it will be time to shut down the business and incur no further loss. Many find that a difficult business may even begin to eat into their personal well-being. Once a business begins to cause insomnia, anxiety, migraines, hypertension and the like then it is no longer worth it. Business is tough but it must not cost you life, after all good business should actually add to your life by giving you more options and time and the best things to be paid for in life.
Once it takes more than it gives, and is nothing but a source of ongoing stress no matter what you try, that could be a sign that it is time.
A clear indicator in the case of businesses that have products that can be counted or tracked as they are used or consumed is uptake. Many founders fall in love with their own product and are convinced that it is the best thing ever.
However, if no one is willing to pay for your solution to a specific product, the writing will be on the wall. What is needed in business are paying customers not sympathisers so the numbers will show clearly that the value proposition is weak. It will take courage and humility to accept that and shut down.
Some close their businesses when they simply realise that they have moved on from the initial guiding principles, mission drift is real and if one no longer feels so inclined, it is best to shut down.
Often when that happens another indicator emerges, the best of your staff begin to leave.
Loyalty is an important quality to have but it is a tough sell to convince great employees to stay on when they can see that there is no future for your business. If anything they may know about its cycles and seasons, more than the business owner, for they may be active in production and operations.
Retaining good people requires there to be positive prospects and so where there are none, your best guys will walk away, instead of being angry take that as a signal that it may be over.
While it may work for some businesses to go into hibernation or care and maintenance mode, it is usually wiser to bite the bullet once and close business. In doing that there are some important aspects to cover.
The most important first step is to make a solid and bold decision to close shop. Be very clear on what you are doing, ensure your heart and mind agree, it cannot be a half hearted measure, it will take its toll on you so you need to be sure. Where one has operated as a sole trader it is fairly simple as all rests on you, but for those in partnership or any arrangement that involves others, there will be need to consult and secure consensus.
On that score of consulting is the next step, reaching out to various types of professional both for advice and guidance but to ensure one complies with everything required at law to shut down. Ones lawyer will come in handy as will tax consultants and accountants.
Find the optimum way to shut the business and also confirm the specific attendant steps. Once this is known and agreed on, it will be time to do the paperwork that dissolves the company of business in earnest.
Naturally, every business will have some employees and business partners that may be affected by the decision to fold. Very likely they will catch on to what is happening and it is always a professional thing to communicate developments with them in a wise and sober manner so that they know what to do in that season as well. Being honest works best, possible even share the numbers and the observations that led to arriving at that decision.
They will also want to know what their exit package will look like, have the information ready, and do ensure that fairness prevails — all dues must be paid as per individual contacts.
Keeping staff updated has the advantage that you have buy in and they can work with clarity to complete all outstanding orders to maintain goodwill, as well as effectively pursue and collect any payments due to the company as they will appreciate that is where their own remuneration will come from.
The same level of care and service quality must be maintained as this can impact future work and business transactions for both the workers and the business owner.
Likewise the business will need to also settle all its dues as close all outstanding matters. After these are sorted out, the assets such as machinery, equipment, stock if any, can be sold through auction or at source to staff or any other willing buyers. There is no need to hold on to it, when one is certain they are well and truly done as it may become obsolete.
Finally, there will be a need to keep records of all activity in the company, from production to sales through to payments received and made in lieu of orders.
Tax information is especially important as the taxman requires it kept for future reference anyway of up to six years after transaction. Bank accounts are best closed as well so that they do not lie dormant and susceptible to fraud. One can get a hard or soft copy of the statement from beginning through to the closing account date for future reference. That break may be the required action to rest one and stimulate new ventures. Never fear, once you have put in your all, to shut down a business that is not yielding returns.
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