The Covid-19 crisis negatively affected businesses around the world and a number of major companies – including Neiman Marcus, Dean & Deluca and True Religion Apparel – filed for bankruptcy.
A friend of mine who resigned from her job two years ago to start a creative agency is going through a closure process and feels devastated.
“It could’ve been something. Perhaps I can do it again one day,” she told me.
Many of us are thinking about our plans for the year ahead, and quitting a business to start something else may be one. Closing down your business is tough, and may make you feel like a failure. I know, because I have been in that situation. I started and managed my own online fashion business prior to joining the semi-government sector. My fashion business was doing well, but I was also focused on my day job, and on my growing consultancy, so I had no time to dedicate to the creativity and attention that the business required. Closing it down was the best decision I made then. I didn’t wait until my business was performing badly. I knew that it was something that I had to do given the rate at which my other commitments were growing, so I ripped off the Band-Aid fast.
So what is the right way to close a business? Here’s a simple guide on how to shut up shop and how to prepare for the next chapter.
Ask the experts
Before you go ahead and tell people your business is closing, seek the advice of an accountant and/or a lawyer on how to best conduct the process. This, of course, depends on so many factors such as whether you have investors, you took out a loan, or any settlements you need to make to creditors.
In my case, I self-funded my business, and I had already made some profit so the process was smooth and swift.
Depending on your business, you may have some payments due from your customers. It’s best to make sure you’ve received these before you inform them about your decision. Otherwise, some people may stall knowing that you are closing and think that they may not need to pay you.
Make some money on your way out
Depending on your line of business, you’d be surprised at how many things you are able to sell – from the business itself to IT equipment, products and even your web domain (especially if it’s a catchy one). An acquaintance of mine sold his web domain address for $1,000 when he closed his business. Other domains can sell for hundreds of thousands of dollars.
Keep your stakeholders in the loop
This is important for all businesses, but is crucial during tough times. If you are planning closure for some time, don’t wait until the end to tell your employees. While some business owners do this so that sensitive information isn’t leaked, there are ways to protect confidential information while keeping your employees in the loop. Be there for your team, and try to accommodate them as much as possible. Perhaps you could help refer them to your acquaintances, or share their resumes with friends. Offer quality customer service to the last day, share your news with customers and thank them for their support.
Reflect and move on
Quitting doesn’t mean the end of your journey. In the case of my friend, she’s taking time to reflect on everything that has happened, and the lessons she learned. She now knows that she wants to focus on a specific service, and to only offer it online when she jumps back on the wagon.
Quitting a business may be one of the hardest processes an entrepreneur has to endure, but it is one that is best done sooner rather than later.
Manar Al Hinai is an award-winning Emirati journalist and entrepreneur, who manages her marketing and communications company in Abu Dhabi