Closing your business is one of the most difficult jobs you will ever do as a business owner. Not just because there are a myriad of things that must be done, but because it is a highly emotional time in your life–your business has failed. It doesn’t matter how experienced you are, nor how well you adapt to the adage: “Fail more to succeed more,” it is still an emotional time.
There are many articles, guides, checklists, etc. available to help you with the mechanics of closing a business, but there is very little offered to help you handle the emotional things required. Hopefully, the following will help:
1) Don’t drag out the decision. If your business is in trouble, you either have to struggle along, implement a turnaround program, or close the business. Someone once said it is important to “fail hard, fail fast”–good advice when your business is having serious problems. Set a deadline and a “make or break” result target, then give it all you’ve got. If you don’t hit your target–close your business down.
2) Sit down with your family. It is not fair to keep family members in the dark about your business problems. Nothing can harm a family more than having a Process Server knock on your door and hand your spouse foreclosure papers on your house. Family members can also be a great help and support during this trying time.
3) Seek outside counsel. Hopefully you have an advisory board, or group, that you can share your concerns with. If there are experienced business people in the group, they likely have experienced what you’re going through and can help guide you through the mechanics of closing a business. They can also provide some emotional support.
4) Don’t use government money. Never use any withholding tax, or tax deposits of any kind, to keep your business operating. You hold these taxes in trust and you are personally liable for them. Don’t make matters worse by spending any of this money.
5) Develop a shutdown plan. There are dozens of things that must be done in a short period of time, and they always seem overwhelming. Make a written plan with dates and times for completing each listed task, then cross off each item as it is completed. You will find that this reduces the stress considerably. Share this plan with your family and your advisory group.
6) Try to make everyone whole. Ideally, your shutdown plan would show enough money to pay all the debt of your business, including any investor money involved. Rarely are conditions ideal in these circumstances however, so you will need to pay whatever you can to whomever you can. This will become extremely important when you start your next business.
7) Your business failed–not you. This is the single most important thing to keep in mind while you are closing your business. Every successful businessperson you could name has had failures–large or small–during their careers, and that certainly did not make them failures.
8) Look for the next one. Once an entrepreneur…always an entrepreneur. Even if this was your first business, you are now spoiled to ever work for anyone else again. Even through all the stress and trying times, your entrepreneurial spirit will emerge strong. So keep an eye out for your next entrepreneurial project, even while you are winding down your current one.
There you have a basic list of things you should do when closing a business, and each of them involve some aspect of the emotional stress involved in shutting down your business. No one said it would be easy, but many people are going through the process every day. If you have to–you can do it as well.