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What Steps Do I Take When Closing A Business That Doesn't Sell?

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Comments & Replies: 2     Views: 6134     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange County Areas

Every business broker knows that a listing taken is not a listing sold, in fact the ratio of listed vs. sold could be discouraging if you really thought about it. Joe Ranieri (Orange County Business Broker) discusses what you should do if you finally have to close the doors and call it quits.

Topics: Selling A Business     Tags: selling a business



Every business broker knows that a listing taken is not a listing sold, in fact the ratio of listed vs. sold could be discouraging if you really thought about it. Early in my career I would try to guess which of my listings would sell and which ones wouldn't, but after years of doing this, I've given up on that line of thinking. I've worked with many sellers who have had to abandon a sinking ship, some have been successful, while others have not, and so this is my advice to the ones who have not...

1. Collect all outstanding debts or accounts receivable, before they know you are going under.

2. Unload the remaining inventory you have, possibly by marking it down significantly.

3. Notify creditors and lenders that you are closing, so they have appropriate time to ask for payment.

4. Cancel any service contracts you may have.

5. Tell your landlord, but be prepared that he may and probably will sue for time remaining on the lease, because, hey they’re landlords after all.

6. Important: Notify and pay your employees. Be honest with your employees, but don’t be surprised when they start looking for other jobs, but make sure everyone is squared away financially.

7. Liquidate your assets, consider approaching competitors to see if they are interested in purchasing your fixtures, furniture, and equipment.

8. Make your final federal and state fillings (payroll, sales tax, etc.)

9. Cancel all state and city licenses and permits.

10. Notify utility, credit card, and any other service providers.

11. Close your business bank account.

I would be interested in what other advice those on this Discussion have.

Replies To This Comment
 
Contributor: Transactional Attorney  Post ID: 1354
To add to Joe's helpful response, I'd add that if you can forward your mail and phone calls it will help you ensure that you're not missing any liabilities that may pop up after you close that you wouldn't otherwise be aware of. It's much better to get a phone call or letter regarding money owed or a potential claim than to face a lawsuit down the line because a party couldn't reach you at the business location.

It's also important to file a dissolution with the state if you are a corporation or LLC.



Joe provides excellent advice. I would add the following: Don't assume you know what you don't know. Consult with your attorney, your CPA, your insurance broker, and your banker. Their advice is invaluable and essential to avoiding civil (and even criminal) liabilities.


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Lee Petsas, Business Broker - Orange, San Diego Counties, Inland Empire

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What Steps Do I Take When Closing A Business That Doesn't Sell And I Close?

Every business broker knows that a listing taken is not a listing sold, in fact the ratio of listed vs. sold could be discouraging if you really thought about it. Joe Ranieri (Orange County Business Broker) discusses what you should do if you finally have to close the doors and call it quits.

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