Important steps to take before closing your business

On Behalf of | Sep 20, 2021 | Business Law

When you started your business, your ambitions were high and so was your confidence. You sought investors and got them. You sought qualified employees and got them. You knew it was never going to be easy, and you made a go of it. But competition was stiff. Even though you felt your company had an almost unique take as a business, it struggled.

Roughly half of all start-up businesses fail within five years. In your situation, money was slowly running out and market timing was not the best. However, you and other companies also had to deal with the effects of the COVID-19 pandemic. It was almost a perfect storm. Although you made a gallant effort, you realize now that it is time to close your business.

Inform and pay employees, sell assets

Upon deciding that your business will cease, you must take proceed in an assertive and deliberate manner. Even though your company will no longer be in operation, you still want to maintain connections with key players, clients and employees in case you pursue another business endeavor.

Here are some of the crucial things to do before closing shop:

  • Notify the pertinent people and players: This list includes employees, clients, suppliers/vendors and the numerous business contacts you have made within the community.
  • Sell off any remaining assets: Some assets will be more valuable than others, so review inventory and decide which ones to liquidate and which ones to keep. You can best do this through auctions, the internet and sealed bids.
  • Take care of all outstanding bills: These must be paid. Expect creditors to come calling to collect what your company owes them. By paying them right away, you may fend off any potential legal action considered by creditors.
  • Pay your employees: While the paychecks may be the last ones you distribute to them, it is a good idea to maintain those relationships. You may call on them for your next endeavor. Severance pay also remains a possibility.

By taking these steps, you will make the closing of your business a less painful experience. The outcome is not what you had expected when you started your company. But you remain optimistic as you may have other business ideas.

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