You tried your best, you worked hard, and you did what you could to make your small business succeed. However, it’s clear that your company is going to join the list of a small business going under, and you aren’t sure what steps to take to protect yourself and ensure your finances are strong.
The following steps are designed for this nightmare scenario and will help make this process smoother and less challenging. Nothing about going under is going to be easy, of course, emotionally or financially. But mastering these steps will help to ensure that you do everything correctly as you go under.
Step One: Collect All Outstanding Accounts Receivable
If you’re a small business going under, there’s a good chance that you still might have some outstanding accounts between you and your customers that must be collected to ensure that you are fully paid. This process is particularly important when you’re going under because it gives you a little capital to take the next stage of your life.
It also helps make sure everything is legally proper and keeps you from having to talk to courts or any other legal experts. Thankfully, your customers should be willing to pay you in most scenarios, minimizing the need for any legal help from a lawyer. But what kind of payments are you likely to still be owed from your customers? Just a few standard options that you may be owed include:
- Products Purchased – If your customers purchased products from you but have yet to pay (and you’ve delivered the goods), they need to give you that money now. Typically, this process is quite simple and shouldn’t take a lot of time, allowing you to handle this exchange with minimal concern or difficulty. And if you have yet to ship out any items, make sure you do so to enhance your ability to get paid.
- Services Rendered – Does your company provide services instead of products, and your customers received a service but have yet to pay? Make sure that you collect this money before you close down your shop. If you don’t collect it now, you may end up unable to get it later. And this issue is never worth tolerating, so make sure that you pursue this issue to the fullest extent possible to avoid concern.
- Subscription Payments – When your customers pay you a monthly, bi-yearly, or year subscription payment for services or customers, make sure that you collect this money before closing down. Doing so will ensure that you don’t lose out on any financial compensation you may deserve. Remember, though, that this subscription will soon end, and you won’t get that regular payment anymore.
In most cases, you should have little difficulty getting your money if it is owed to you. But what happens if your customers won’t pay or refuse to contact you? Do you need to contact a criminal law firm to get help? Probably not because a criminal defense lawyer is not the most appropriate option for you. Though they can provide many benefits, their specialty is not suited for your case situation.
Instead, you’ll most likely need a civil or financial legal expert who can provide you with the help you need in this type of complex economic scenario. Going through this frustrating kind of lawsuit is never easy because you may be ready to move on with your career and start up a new business. However, it’s a step worth taking if you want to ensure that you keep yourself financially solvent.
Step Two: Get Rid of Your Inventory
When you’re a small business going under, you may have a large amount of inventory that you just don’t want anymore. This inventory may be in your store, in warehouses, or even in your home. Getting rid of it is a multi-tiered process and is one that all companies need to take when going out of business. When done correctly, it can be relatively painless and even somewhat profitable.
When taking these steps, it is good to get notary services that can help you keep track of your sales. This team can also work with a probate attorney and other professionals to ensure that you handle this process legally and professionally. Though you may not want to hire any more lawyers at this point, doing so is critical because it will ensure that you can get rid of your inventory by following these steps:
- Hold a “Going Out of Business” Sale – Let the community know that you are going out of business by holding a special sale. Put up signs in your windows advertising your deal, take out advertisements, and post about it online. Though it may be painful to do so, this process does help to increase your potential profits and may help make it easier to transition to another operation in the near future.
- Donate Your Goods to Charity – If you have any leftover items that don’t get taken away in your sale, you can donate them to charity to get rid of them. This option is a good one if you just don’t have the time to set up specialized sales and want to help your community in any way. This process is critical because you can offload your unsellable inventory without having to store it anywhere.
- Consider Online Sales – Many online sites (especially social media options) will provide you with a place to sell many of your items. For example, you can get cash for electronics from many people, get decent cash for junk car models your business may own, and much more. These steps help to get rid of your inventory without costing you a lot of money in the process: a win-win for you.
- Community Sales – When you have no other options for getting rid of your inventory, you may want to hold a community sale. You can rent out a small park or location and put up your goods at very low prices. Yes, you may lose the products, but getting some money is better than nothing. At this point, simply getting out of business may be the best option for you.
Furthermore, you may want to seek out any big box stores or those retailers that buy and sell goods that other stores cannot. These shops are often an excellent option for a small business going under because they give you an outlet for your goods and still keeps your products in the public eye. If you ever want to restart your business or create a new one, this step may help keep you relevant in the face of closure.
Step Three: Handling the Rest of Your Legal Steps
As a small business going under, you’ll need to work with a chapter 13 bankruptcy attorney to ensure that you are protected. You may also need a workers compensation lawyer and other legal professionals who can help you out. The many steps necessary in this process are not as complicated as they may seem but must be done right to ensure that you’re a small business going under the right away:
- Notify Your Creditors – If you owe a debt to anybody in your business, you need to notify them that you are closing to make it easier for them to collect any debts or set up a repayment process with you.
- Let Your Customers Know – Let any customers with whom you have contracts know that you are closing and return any money you may owe them for services or products you cannot render.
- End Your Lease – Talk to your landlord about your lease and let them know you are closing. Give them at least 30 days warning and, if you can’t, be prepared to pay a heft fine for early termination.
- Discuss Closing With Employees – Let your employees know what is happening to give them time to seek out other employment opportunities. Doing so helps protect you legally and saves your reputation.
- Pay Your Debts, As Possible – Give your employees their last paycheck and pay off as many debts as you can, setting up payment services if possible.
- Do Your Last Payroll Deposits – Deposit your last federal and state payroll payments to ensure that you are square with the government and not affected legally.
- Handle Your Last Taxes – Pay and finish off your last business taxes to square up with the IRS and avoid lengthy or costly lawsuits.
- Close Up Shop – Close all of your business bank accounts, cancel permits and licenses, and contact the proper legal authorities to dissolve your business after leaving the premises for good.
At this point, your small business is closed, and you may be staring at the rest of your life with confused, upset, and uncertain eyes. Like many people before you, there’s a good chance you have no idea how you’re going to move on from experience. But take heart because you are not alone. And many people have been in your situation and become more robust and even more professional later.
Step Four: Move On With Your Life
Don’t forget that you also have a life to live after this experience is over. That means you need to start looking for new career options or taking steps to get back on your feet. There are many options that you can take to start your life over and feel more confident. Taking the proper steps will ensure that you can either transition to a new business or start a new career:
- Educational Help – You may want to consider personalized recruitment messaging for higher education if you need to be trained for a new job. These professionals will help to ensure that you are satisfied with this transition and cut back on challenging training situations that you may experience.
- Find a Suitable Job – When you’re transitioning back into a business-free life, you shouldn’t wait too long to get a job. You may find it hard to take orders after operating a small business going under, but doing so will give you the strength and financial security that you want and deserve.
- Transition to Better Positions – Work hard to move up in your new job and transition to better positions. Start taking your money and saving it up, paying off your debts, and putting it towards a potential nest egg for starting up your new business again, if you so desire.
- Make a Decision – Once you’ve found some financial success in a new position, you need to ask yourself a few essential questions. Do you want to stay at your new job and work hard for others? Or are you ready to transition to a new business, one that will be free of the mistakes that plagued your last?
It isn’t going to be easy to transform your life: we can’t promise that you will struggle or find it easy to go back to everyday working life. However, we believe that people can regain their footing quickly and become happy and successful with minimal difficulties. Just take the time to start up your new career, save up money, and you may find yourself ready after finishing up with your small business going under.
Transitioning as a Small Business Going Under
As you can see, being a small business going under doesn’t have to be a frustrating or agonizing experience if you’re smart about how you handle it. But, yes, it will be hard to see your store close down, and it’s okay if you feel like crying when you are finally officially out of business for good.
However, you can use the lessons learned here to transition to a better and more successful life. And use the mistakes that you made with your first business to become a more robust and better person. Don’t be afraid to take nursing jobs or other career changes to help fuel the next great adventure in your life.