8 Tips on How to Successfully Exit Your Business
COVID-19 has delivered numerous challenges to business owners in 2020, some of them unprecedented. Very difficult decisions need to be made by owners about the future of businesses they have diligently built over a long period of time.
Most anticipate reopening once Stage 4 restrictions are lifted. However for those who don’t, there are many considerations to exiting a business.
If it’s a business worth selling then a sale of business or succession to a family member are options. Check out some tips and options for selling the business on the Finn Group website.
If closing the business down (called liquidation) is the most logical option, below are my top eight suggestions to help you exit with the best outcome.
1. Setting a date
Setting a timeframe for closure provides the focus that is required and allows you to better plan your transition. With a date in mind, you can inform stakeholders who have supported your venture such as the landlord, customers, employees and suppliers ahead of time. You never know, sometime in the future, you may start another business and need their support again, so it’s best to leave on good terms wherever possible.
2. Staff
If you are an employer as well as a business owner, It is really important that you look after your employee’s needs while you exit. Ensure you are up-to-date with pay and entitlements that are due and provide references to assist them to find alternate employment.
3. Suppliers
Notify your suppliers and complete any work-in-progress. Basic business ethics and respect for those that have supported you apply here. Tell them of your closing date, ask for an updated balance of outstandings and work with them on a payment plan.
Contact your communications, electricity, gas and water retailers and request a final reading and pay them. That way you will not get future requests for payment after exiting the business. Notify your bank and any service providers like security and insurance. This helps protect your credit rating and your ability to trade with them in the future
4. Customers
Notifying your customers is a critical step in closing a business down, yet many forget to do it. Your customers have sustained you to this point, so don’t take them for granted.
Let them know what is happening and why. If you have a good customer data base, contact them directly, if not, post on social media and your website if you have one.
5. Premises
Landlords have a large financial investment in any business premises you lease or rent. These are often geared to loans reliant on your business to cover them. So if you rent or lease premises as part of your operations, carefully consider your lease obligations.
Review your lease, get advice from your solicitor and discuss the situation with your landlord or their agent. You may have a clause in your lease that requires you to make good when moving out or be exposed to payouts and other financial penalties if you wish to exit the contract early. Check your exposure to any pledged personal guarantees that extend beyond closing the business down.
6. Assets
If you have assets like shop fittings, vehicles, stock and equipment -arrange to sell them.
This will assist you in meeting your obligations to staff and suppliers and also avoid unnecessary extra costs to remove and dispose of them.
7. Directors
Depending on the legal structure of your business. There may be other directors that need to be informed and considered in this decision. Don't walk away without addressing the legal entity your business operates as, because it may come back and haunt you into the future.
8. Get Expert Advice
Discuss requirements with your accountant or solicitor and work out a plan together to make the transition as smooth as possible. For instance you will need to inform ASIC at a minimum and probably other authorities depending on the nature of your business.
Mark Hall
Founder & Managing Director The Exit Plan
LinkedIn
Further information:
The ATO are running a series of free webinars specifically about closing your business.
If you need
a local professional for any aspect of exiting the business or finding new employment try the Venture Melton Business Network Directory
financial counselling visit Money Smart
urgent help with money visit Money Smart
help with a personal crisis visit Lifeline
local employment options visit Working for Victoria, The Atherstone Exchange and Melton Jobs Hub