6 Steps to Close Your Business Gracefully & Start Over

by Edgar R. Olivo

Closing a business is one of the most stressful, emotionally and financially draining experiences many entrepreneurs have to face. There are many reasons why a business owner will have to shut down, and sometimes plans do not always work the way we envisioned.

Considering the state of our public health and economic climate, now more than ever, businesses are facing the inevitable decision to close their doors and start over. If you find yourself in this situation, read on.

How do you know when it is time to close your doors? From my experience having been in this situation myself and working with countless business owners to help them open or close their doors, here are a few signs it is time to start over:

  • Your business is losing money regularly and not meeting sales goals.
  • Your business keeps requiring more investment to stay open.
  • You are in an industry that is severely impacted by the global pandemic.
  • Your financial and mental health are severely drained.
  • You stopped enjoying it.

Letting go of your business to start over is a delicate process and requires the support of professionals to help guide you through your unique legal and financial obligations. You should always get advice from an expert in business.

Here are six steps to help guide you through the process of closing down your business.

  1. Be honest with yourself. Facing a difficult reality is never easy, but once faced, the path toward resolution reveals itself. This means you will feel much better about your next chapter once you have looked in the mirror and accepted the inevitable likelihood of closing your doors. Talk to your closest family members, friends and colleagues to gather their feedback. This is not a decision you have to make alone, but it is a decision you have to make yourself. Remind yourself that closing your business is not defeat; instead, it is the beginning of a better chapter.
  2. Organize your financial situation. Keeping good business records will make your situation much easier to manage. If you were using software to keep track of your finances, good for you! If you manually keep track of your business inflows and outflows, I highly recommend you invest in accounting software. Today, there are many free online options, like Wave and ZipBooks. Make sure you fully understand your financial position at the time you close your business. Ask yourself: How much do you own? Who owes you? How much do you own and who do you owe? What needs to be liquidated? How much do you have in cash reserves?
  3. Hire professionals to handle your sensitive matters. Closing a business can be a messy and complicated process if you have never done it before. Getting help from a lawyer and an accountant will be critical during the closing stage because it shifts the responsibility of a lot of your sensitive matters to experts. This helps you focus on taking care of yourself and your remaining customers. Your lawyer and accountant will be your best resources to navigate the challenges of ending lease contracts, financial obligations and more. You can also find free support at your local economic development office; they can connect you to experts in your district.
  4. Reflect and document the lessons you learned. Your lessons are your golden ticket for your future! Sulking in the negatives of closing a business dampens your vision; instead, focus on the valuable lessons you picked up during your business journey. Document your lessons in your notetaking app on your phone or wherever you keep your journal. Find quiet moments to reflect on how much you have grown since starting your business. Take the moment to see your own personal progress and spend time nourishing yourself with positive influences to help your mind focus on solutions.
  5. Set new goals. You should not stop setting goals once you stop your business. When you feel ready, start off by setting smaller goals you can achieve like setting up a new workout routine, checking in with your family more regularly, or finishing the book you have been putting off. These small routine commitments will help you rebuild your confidence to set bigger goals in the future. The key is to always have goals, no matter how big or small.
  6. When you are ready, get back in the game. The world is filled with opportunities. Many opportunities come as flashes and other times they keep showing up over and over for you to finally grab. As you start to feel better about closing the last chapter and get ready to open the new one, never stop looking for ways to serve others by solving problems. Being equipped with your new lessons and time spent away from your previous business, you will have a better perspective to solve problems in a better way for the future.

Remember, facing this reality is not easy. If you feel you are ready to close your business, give yourself permission to start over. You are going to be ok.

EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.

Para la versión en inglés de este artículo, haga clic aquí.

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