What to Do When You Must Close Your Small Business

Posted by on Sep 3, 2011 in Business Development | Comments Off

What to Do When You Must Close Your Small Business

People close a small business for many reasons. Some do so for personal reasons such as wanting to retire or having a baby. Others are forced out of business due to a violation of the law. But the majority of businesses close for one simple but powerful reason; no sales.

It can be disheartening to have to close a business because you couldn’t interest customers in your product. In fact, it can make you feel like a failure. You’ll even think that if you had tried a little harder then maybe the business would be a smashing success instead of a phenomenal flop.

The first thing you need to do is realize that entrepreneurship is a tough road to walk which is why a lot of people stay in the safe lane of employment. Instead of beating yourself up about having to close a business, you should congratulate yourself for being brave enough to try to make your dreams a reality.

If you have come to the decision to close your business, here are three tips to help ensure a smooth transition.

Meet with Your Business Team

Closing a small business begins a visit to your accountant and lawyer. Depending on how your company is set up, there will be forms that need to be filed to let the government know that you are not going to be in business any longer.

This is especially important if you owe back taxes. Before you close your small business, you must get any tax obligations cleared up if you want to protect your personal assets and credit rating. Even if you are a sole proprietorship, it wouldn’t hurt to get some professional help to make sure all the correct paperwork has been dealt with properly.

Notify Customers and Suppliers

Customers will need to be notified as soon as it’s feasible that you will be closing your business. Be prepared to offer recommendations on where they can get your product or service. If you own a business that maintains information on customers, such as an eyeglass store, they will need to know how they can gain access to their information should they need it.

Additionally, you’ll need to notify suppliers and service providers that you are closing your business. Suppliers will want to know when your last delivery will be, what returns you’ll be making and when they will be paid in full. Service providers will need to know when your last day of service will be and where to send your final bill.

Fulfill Your Business Obligations

To protect your business reputation, be sure to complete any outstanding orders. If you are not able to, notify your clients and return any money they have paid. Maintain your relationship with these customers by helping them find someone who can assist them with their needs.

Additionally, try to collect money that is owed to you before you close your business. It can be infinitely harder to settle outstanding accounts once the business has been dissolved.

Having to close a business can be one of the toughest challenges you face as an entrepreneur. However, don’t let a business failure discourage you from getting back on the horse and trying again. As a wise man once said, “It’s not how many times you fall that matter, it’s how many times you get back up”.

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