Every day 500 + people search the term how to close a small business. Surprisingly enough no one has addressed this issue on small business blogs and entrepreneurial forums with much thought. Check for yourself, Google the keyword how to close a small business and the first result (if it isn’t this post) will be something not exactly relevant to the topic. Considering how many people are searching for it a day, why do you suppose that is? I pondered this for some time and decided to write a post on what to do if your small business goes under and more importantly how to grow from failure.
Many people, especially in entrepreneurial circles, are deathly afraid of uttering the “F” word. Just like if you are going through a divorce, often you’re married friends seem a little uncomfortable around you… it is our human nature showing. When we see others fail we ourselves begin to fear we will fail, often superstitiously we think that if we are in proximity to failure we have a greater chance of failing. But more than anything it is just our negative selves taking over.
So your small business is failing
Garret has had a small business for three years now and in the last few months has been seriously considering shuddering the windows and closing up shop. Garret is in the real estate business and in his home town of Jacksonville, Florida. He began a small residential real estate firm that only takes on a few agents and up until the great crash two years back was doing quite well. But the last 24 months have destroyed Garret’s client base, shook his confidence and sent packing his best people. So like a lot of others in his shoes Garret has decided to close his small business and try to rebuild his life.
What I would do…
Most people may say “yep Garret is up a crap creek without a paddle” but I’d wouldn’t close his business if I were him. Instead I would cancel my lease for office space, say ciao to my remaining employees (they would lose their job one way or the other) but keep my license and continue to do business. If I were Garret I would completely re-invent myself and my business. Maybe he could start using social media to garnish a new client base and instead of having a brick and mortar business he could invest a few hundred bucks into a premium blog theme and operate solely online.
There are 100 ways Garret can reinvent himself, he can see that the market in Florida is still vastly under priced and decide that he can wait it out until things get better. He could take on a side job and run his now internet business at night. Garret could use twitter to promote himself and his personal brand while reaching out to people all over the country who may be interested in investing in some cheap real estate for their retirement in ten years. Most importantly, if I were Garret I would take this tough time and niche down so specific that NO ONE could beat me at what I did. I would become the real estate guy “Who sells you retirement homes, for insanely low prices, that have tons of potential, 20 years before you are going to retire”…. or something similar that is incredibly well defined and makes you stand out.
Will not giving up work for sure?
Who knows, but it has a better chance than giving up without a fight. Many people have made their millions right on the brink of crashing and burning. When I first started up my business I truly thought “I won’t make it past this next month” so I would get a pen and paper, brainstorm and niche down until I found a market who would want my services.
If it is time to say bye bye
Just like with old loves, don’t leave on bad terms if at all possible. Tell your business you loved it for a while, you learned a lot from it and you are sad to see it go. Never, ever fail without learning something. Because if you take a life lesson out of a complete bust it isn’t really a failure anymore. It is just a mighty hard learning experience.
Succeeding is not really a life experience that does that much good. Failing is a much more sobering and enlightening experience. -Michael Eisner
How to close a small business check list
- Double check your motives, if it is fear based and not logical to close your small business seriously give it thought. Ask yourself questions like “If I totally re-invented Company X could I pull a profit in X months/years?
- Ask for forgiveness not permission. This means if you have to close your business make the necessary changes without dilly dallying for days. Decide what has to be done and do it, if people are hurt/offended or mad so be it. You can only do so much and in this case you are trying to get out of this awful situation with the least amount of debt and emotional scarring.
- Check with a lawyer. Is there ways you can get out of leases early, is bankruptcy for you? Many questions like these are excellent for a lawyer, find a good one and invest in the services to make sure you’re hind quarters are covered legally.
- Sell as much as you can. Have ‘blow out sales’ and advertise on and off line. Try to get as much of your inventory as possible out the door and off the shelf before closing. No one wants to be stuck with 1000 bars of dial soap from your failed Grocery store.
- Give the rest away. Check on the tax deduction you can get for the losses your business takes and the donations you make.
- Give yourself a pat on the back. You did what most of the world is afraid to do, you started your own business. Granted it closed, but still you learned and you really should be awfully proud. Next time around (oh and there will be a next time) you’ll be so much better off and wiser.
- Read ‘Think & Grow Rich’ by Napoleon Hill.
- A few weeks or months later go back to your closed business, in your mind of course, and ask yourself “what went wrong?”. Try to define on a piece of paper exactly where you messed up, where others messed up and if you were just in the wrong market. Later on when you try something new again take this list out and go over it making sure that this time you don’t make the same mistakes.
Remember, failing leads to success, it preps us to be tougher, more shrewd and not waste. Failing gives you the thick skin you need as an entrepreneur. I hope this post will help any of you who are thinking of closing your business. Always remember if you go to bat often enough eventually you will hit a home run 
To your continued success in life and business,
Maren Kate
