Field Notes: When Closing Your Business Well Is The Last Option Left
It’s a startling fact that roughly half of small businesses close in the U.S. in the first two years and 75% in the first ten years. Add to that fact that when small businesses are facing the decision to close, fewer than 20% are sold so that the business can continue under new ownership. When a small business is unable to make a profit the owner is paying customers to eat their food, buy their merchandise, or utilize their service. These are brutal facts shaping the entrepreneurial ecosystem today.
How can businesses manage a closure when all other options have been exhausted? Here are a few tips:
- Put your people first. Ask employees if they have job prospects. If they do not reach out to other businesses in your area and put in a good word. At the least provide a reference. A great employee can make a business successful. Help employees like this find their next act. A soft landing is the best outcome for staff.
- Manage your inventory and liquidate what cannot be sold through standard business. Accelerate the discount on inventory as the closing date approaches. Because profit is made on the margin and every dollar is precious, try to get as much as you can from what is on hand without leaving any inventory after you close.
- Rally your loyal customers and followers for a proper send off. Maybe it is an event where everyone comes together to buy what remains. Another option is to create a memory book where people can contribute photos or write memories. Doing this step properly will help to bring closure and let the memory live on of what your business meant to people. Memories like this are priceless.
- Sell your furnishings and fixtures. There is a vibrant and robust market for lightly used furnishings and fixtures. Again, reach out to other businesses you own. Maybe there are businesses looking to open in your area who would buy your furnishings. This helps you them by getting what they need at less than sticker prices and you by generating some precious cash.
- Utilize resources for small businesses. The Small Business Administration (SBA) has a Small Business Development Center (SBDC) has staff in every county throughout the US. They can provide confidential low-cost or no-cost advising for you and your business.
One final option is to restructure your business and go from a bricks to bits strategy. Keeping your business open on paper and selling your products online could help you keep connected with loyal customers, regain and grow your profitability, and lay a foundation to open a bricks and mortar location some time in the future when the timing is just right.