Not many small businesses see themselves in ten years. Many of them would settle for five years or even eight. But no one expects to be around for more than ten to twenty years. This is because, after those years, that’s where many problems start occurring for small businesses. Sadly, these problems are usually too much for a small company to handle. It then forces the company to either transition to a more prominent company and gains more debt or gamble in expansion.
Either way, many small business owners don’t take this risk and sell the company instead. If you find yourself in this peculiar position, consider these tips to close down your business successfully.
Start Managing Assets
Months before you plan to close down your business, you’ll have to start knowing more about your assets. These assets are essential once you liquidate your company because they will identify how much money you’ll have by the end of it all.
The primary asset you should be looking for is liquid assets. This particular kind of asset can easily be converted to cash. Cash-on-hand is one of these liquid assets. The main advantage of this kind of asset is that you are yours no matter what. They aren’t affected by market value or by the debts you owe. So you can use them whenever you want, and you’ll need them down the line.
Additionally, you don’t need to sell these assets to get the cash you need out of them. Examples of these liquid assets are cash, accounts receivable, and money you have in your bank account.
The secondary asset you need to identify is non-liquid assets. Some of these assets include vehicles, equipment, and property. These assets aren’t easily convertible to cash, and they are affected by external factors such as depreciation and the market. So it’s going to be tough to make them your own. You have to sell these assets or find someone willing to trade them for something you would like. However, what you can do with these assets is to use them to pay creditors.
If you have debts months before your closing, you’ll have to pay them off, or you might risk going bankrupt. You don’t want to file for bankruptcy once your company becomes insolvent. You want to do it while you’re solvent. So pay your creditors through non-soluble assets, so you don’t have to worry about them once you’ve closed.
Identifying your assets is one way you will know how much money you can get out of your business. Remember that your net income is what you’ve been working for this entire time. So make sure you can get everything out of your business when you close it.
Auction Your Business
Many small businesses that are partially successful are eventually sold to more prominent companies. This is how the economy works because they can’t compete with the big sharks out there without taking a considerable risk themselves. So you should consider this as a way out as well.
Auctioning your business can be a tricky proposition if you’re not well-known in the community. This is why you should invest in marketing months or years before your intended closing. This is to get the attention of big companies, investors, and other entrepreneurs who might be interested in your business. Once they’ve contacted you, you can pitch in your sales presentation. By the end of the day, you might even own a small percentage of the company. Once you’ve sold your company to an interested business owner, you can earn a decent amount of money without all the hassle.
Prepare for Your New Business
Once you have either sold or liquidated your business, consider taking a day off from work. Maybe a vacation with your family. You’ve done well to keep a company like that for so many years, and now it’s time to reward yourself a bit. But once you’ve come back, you’ll have to start building your empire once again.
Once you’ve liquidated your assets, you can start looking for ways to refinance your old mortgage. This particular mortgage of yours is going to be your new start. It’s going to be the principal funds of your next business. And since you already have a decent amount of cash from the one you recently closed, you have a hefty amount when it comes to savings. You’re prepared for a new start, one that can yield many possibilities.
It can be challenging for you to even think about this solution. But in the world of business, when one door closes, another one opens. This is just a cycle of life of the economy. Sooner or later, you’ll still have to let go. It’s better if you leave while you’re still ahead.
