Winding down your business? Here’s what you need to know.
By ATB Financial 14 July 2020 6 min read
With aftershocks of the crisis still echoing across the province, Alberta entrepreneurs need all the help they can get in sorting out the details of ending a business.
It might be unclear how you should tackle the challenges ahead—especially if you’re new to the process of waving the white flag, or already feel overwhelmed with the many commitments of a business closure.
One important thing to remember, shutting down your business isn’t a mark against your character or leadership skills. The business landscape is full of famous trailblazers who failed at first. Henry Ford founded two automotive companies that sunk before he was successful with the Ford Motor Company. Before he made his name with Microsoft, Bill Gates’ first business was a failed company with the awkward name of Traf-o-Data.
What ending your business means is that this idea didn’t work right now, whether due to the pandemic or lack of customer engagement. As long as you learn from your mistakes, you can still have a flourishing career as a business leader and entrepreneur.
But before you look ahead, make time to deal with the various details of winding down your current business.
Talk to your audience
Amid all the financial tasks and legal obligations, communicating to customers and employees is a really important consideration.
“One of the greatest assets that an entrepreneur has is their network,” says Steve Clelland, marketing director at ATB, and former entrepreneur. “When people think of closing businesses, it’s important to think about how to properly communicate to people in order to preserve those relationships that you’ve spent time and energy to build.”
How you communicate your closure to your customers could depend on the type of customers that your business serves. “If you have regular and repeat customers I suggest proactively communicating your closure to them,” Clelland suggests. “Customers who have been loyal to your business and find suddenly that you’re gone without any notice could feel confused and upset. It can also give customers an opportunity to wish you well, or even just redeem a gift card.” Proactive communication could include an email, a letter, a social media post, or even a sign on your door informing customers of your plans to close.
“For a business with customers who have less frequent buying cycles, or with whom you have a less personal relationship, you may choose to be less proactive in your communication. But it’s still important to communicate,” Clelland adds. Contractors, business-to-business, and some professional services could fall into this category. In this case, a notice on your storefront or website letting customers know you’ve closed would be reasonable.
No matter which approach you choose, here’s a few tips to keep in mind while you craft your communication:
- Be positive. While closing a business can be taxing emotionally and financially, try to focus on the positive aspects of your business journey. For example, you might thank your clients for their loyalty, thank your employees and other supporters, or mention some key milestone or accomplishment.
- Stick to the facts. People will wonder why you closed, and it’s okay to tell them. Avoid the desire to “vent” or express frustration at the circumstances that led to your closure.
- Keep it simple.. Communicate your gratitude and facts in a brief, to-the-point message.
- (Optional) Include contact information. While this might not work in all circumstances, if you can include information about how someone can reach you, it’s a sign of goodwill and could result in future opportunities to do business. Your contact information does not need to be your personal contact information (for example, firstname.lastname@example.org).
Before communicating to the public, it’s good form to let your staff know first. Be considerate about how you’ll notify staff when the decision has been made to shut down. As an Intuit post writes, “You can make the transition easier for employees by offering them great references and helping them find new positions. You also need to let employees know their responsibilities for closing down business, wrapping up outstanding work, and turning in any final reports.”
While you turn the page on this chapter of your business, you have an opportunity to take those relationships you’ve built with employees, customers, suppliers, and others with you. It can be hard to tell people you’re closing, but deliberately planning your communication can be an important, and often overlooked, part of the process.
Addressing your assets
If your business sells products as opposed to services, the tricky thing about closing your company is for some, now you have inventory just sitting there and no customers to take those goods off your hands…well, out of your warehouse.
Jason Bacon, senior manager, entrepreneur education at ATB, notes how financial institutions often do the margining on those kinds of assets. So it’s ideal to work closely with them as soon as you can.
But you can be open-minded and make your own moves, he adds. “One company I dealt with was a candy store that closed for good, and that’s a specific type of inventory to sell to someone, right? So the business owners, working with the lender, called other specialty stores that dealt with candy, all across Alberta, and sold it slightly over cost and made a bit of profit. It comes down to being creative.”
Don’t be shy to ask for help
Going it alone isn’t a good idea, which is why you have to engage all the partners who joined you on this business journey.
Bacon says to have open lines of communications with your lawyer, accountant and financial institution so you can manage the many moving parts of this behemoth of a responsibility. Talking to your accountant can help you navigate CRA protocol, while discussing details with your financial institution can help you prepare for any debt repayments ahead.
Look outside your inner circle for help, too. For example, have you come across any other business owners who had to go through a business closure? Chat with them about the challenges they faced, how they overcame those hurdles, and what advice they have for you in your specific situation.
Being mentally resilient
What is often pushed under the rug that you’re about to sell for pennies on the dollar is you and your team’s mental health during the closure.
Bacon says being an entrepreneur is “one of the loneliest things in the world but you’re not alone and there are people and organizations who are out there to help you.”
As ATB noted in this report, certified professionals are trained to assist you with whatever you’re going through, “and to equip you with the abilities to become your healthiest self…If you don’t get medical coverage for any kind of mental health services, not to worry. The Canadian Mental Health Association can connect you with free psychological counselling, peer support and wellness programs.”
Whatever stress and shame and anger you may be enduring right now, take time to think about your next venture. To rebound from a business closure, consider the many other ways you bring your leadership talent and creative thinking to the world. Explore what inspires and motivates you now. And if you still get down about your failed business, remember this parting note, to paraphrase Australian senator Bob Brown: “Behind every successful business leader there’s a lot of unsuccessful years.”