If the worst has happened, and your business is facing closure after a year of Covid-19 shocks, it’s important to realize that you’re not alone. Whole sectors, such as non-essential retail and hospitality faced an unprecedented loss of income in 2020. Many businesses don’t have the financial resilience needed for survival. However, that knowledge can be a small consolation when you have to face up to the reality of closing a business you’ve worked so hard to build.
No matter how hard it is to do, managing your exit efficiently is the first step to recovery and future success. You’ll have learned many lessons over this difficult period, so don’t underestimate how much you actually moved forward.
It’s never going to be easy to close a business you’ve invested so much time and money in, but there are few things you should consider to make it as painless as possible for everyone.
The first thing to do is to consider how you’re going to manage your exit financially, especially if you’re already in debt. If you have some cash reserves, work with your accountant to prioritize how they need to be used. If you already know that you can’t cover your liabilities, there are several options open to you, but it’s best to take specialist advice to determine the most appropriate course of action. Companies such as The Insolvency Experts can help with liquidating your business, guiding you through the process, and helping you to recover in the shortest time possible.
Also, being as open and transparent as you can be with your family will protect them from the shock that a loss of financial stability and reduction in income can bring. It’s a mistake to try and shield them from the worst. When they do learn the reality of the situation, they could be further hurt that you didn’t trust them to support you. Of course, you’ll need to tailor the message in an age-appropriate way for your children, but you may be surprised at how well they adapt to whatever comes along.
One of the most difficult aspects of business closure, for an owner, is the human element. You’re aware of the impact it will have on the lives of their employees and the knock-on effects for entire families. They too will have gone through a long period of uncertainty as they realized that closure was first, possible, then likely, and finally inevitable.
The key to helping everyone through this time is clear and honest communication. People who’ve been aware of the situation as it has developed will already be considering what might happen in the future. Depending on the sector you’re operating in, options could be limited for them.
As the owner of the business, you’ll have to lead from the front. Let them know as much as possible, as early as possible, so they can start to secure their future by seeking alternative employment or investigating the level of government support that’s available. Don’t make the mistake of saying nothing in the hope that somehow you’ll be able to turn the situation around.
At this stage, prioritize the well-being of your employees. Be conscious of the stress that everyone is going through. Reports indicate that mental health issues have increased during the pandemic, so be aware of the signs, and be ready to support as necessary. Changes in behavior, withdrawal, or unexpected outbursts – these may all indicate that an individual is struggling to cope, so don’t blame them if they seem to have changed. Although you have enormous stresses to deal with, you also have a duty of care for your employees, so make it clear to them that you’ll do what you can to support them. Your goals should be to ensure that everyone emerges from this crisis as unscathed as possible and that the relationships you’ve built up, perhaps over years, remain unbroken.
It’s also likely that, over time, you’ve developed strong relationships with customers and suppliers. So it’s not going to be easy to break the news your business isn’t going to be around to support them in the foreseeable future. However, your network of contacts is a valuable asset, and if you do decide to relaunch, they can be a great support in getting a new venture off the ground.
Bear in mind that most people understand the whirlwind which hit many businesses in 2020. All of them will likely have been affected in some way, and they’ll be able to empathize. One benefit of the tribulations of the past year is the increased sense of community we all feel. There’s a sense of ‘there but for the grace of God go I ‘.
So while it’s not clear what the future holds, if you’ve established a positive relationship with your stakeholders, your openness and concern for the impact your closure may have on them will be respected. It can also help to ensure they’ll be ready to do business with you again in the future.
Everything changes. This difficult period won’t last forever. Be realistic about your options in the short term – how are you and your family going to survive financially? What is the outlook for your sector in the short to medium term? How could you use your skills and experience to generate a sustainable level of income?
Equally important, though, is your emotional recovery from the experience of a business closure. It’s natural to go through a period of grieving for what you’ve lost. Be patient with yourself and give yourself time to let your emotions surface. It may take time to get yourself back on an even keel, but that’s essential before you can move forward.
Finally, don’t lose sight of the energy and drive that originally created your business. That was your greatest asset, and it’s still yours to make the most of, so when you’re ready, plan how you can thrive and grow again over the coming months and years.