Not all businesses have a happy ending. Sometimes the best thing to do is to cut off your losses and close up shop. With a lot of things on your mind, you need to wind up your business properly and start over a new leaf. It’s never wise to close the shop up in a hurry because doing so will only plague you with unnecessary headaches, debts, and even lawsuits. While it is true that you are closing, make your exit as graceful as possible.
In the midst of uncertainty, there are companies who prefer to take extreme measures, which will often lead to disastrous results. Getting rid of your inventory, such as excess products, equipment, and materials should be among the first things to consider when planning for a business exit.
When you close down a business, it is much like moving away and it is only then that you realize that you have so much stuff to pack. There will also be a need to inform your customers and creditors about your forthcoming closure so that you may be able to collect what is due to you. Here’s what you need to do to ensure that your closing out sale goes smoothly.
1. Make those discounts go progressively. While you may be tempted to sell your inventory and fast by offering items at super low prices. However, experts say that one of the most effective ways to make the most out of closing out sale is to place discounts progressively, such as ten percent on the first month, 25 percent on the second month, and so on. In doing so, customers will be more evenly distributed.
2. Start Collecting on Your Account Receivables. Before you start informing your customers on your closure, it is best that you make attempts to collect on unpaid accounts as much as possible.
3. Inform your Landlord. It is always best to plan ahead. Give your landlord at least a month’s notice that you will no longer be renewing your commercial lease.
4. Inform your employees and pay what is due to them. Never burn bridges with your employees, especially those who have been loyal to the business. The Harvard Business Review says that “you should treat employees with dignity, fairness and respect-the way you want to be treated.”
Give them an assurance that they will be paid accordingly. Offer to write a letter of recommendation to help them for their next job search, or give a small incentive to those employees who will stay until the day of closure as you will need help in winding down the business.
5. Settle all obligations as much as possible. A graceful exit is what you are aspiring for so pay debts with your creditors to protect your personal liability. This includes the rent owed to your landlord, loans with the banks, suppliers, and your service providers. Once you have settled all your payments, ask for a letter stating that you have settled all your payments in full. Settling all your debts will make starting over again a lot easier once you have gotten back on your feet.
6. Inform your Customers. Your loyal clients deserve to be informed. Notify your customers and settle any remaining contractual obligations, this includes deposits for any services or goods undelivered.
7. Release your best inventory over time. Bargain hunters will keep coming back for more if you release the good deals one by one and not all in one go. ;
8. Consider donating your excess inventory to charity. There will be cases where you won’t be able to recover some of your losses so this should be the last option. While it won’t pay the bills, it will give you a warm feeling in your heart that you have done a good deed.
9. Sell your Fixtures On the Last Day. Lights and fixtures can be sold immediately, but you will need these until the store closes.
10. Close all business accounts, as well as your business credit cards and subscriptions. With that, there is also relevant paperwork to be filled out and these include permits, registrations, and business names. You might need to file this paperwork outside of the Secretary of State’s office. You’ll also need to close all utilities under the business name, as well.
Going out of business requires a business plan. It is always advisable to plan accordingly and would require professional help in the form of inventory liquidators, accountants, or auctioneers. Remember that a closing out sale is a business model in itself.