Temporarily Closing Your Business; A Checklist to Make it Successful
by JimD, Former Moderator
- Created: October 5, 2010, 9:50 am
For many small businesses, temporarily closing the doors is
often less of a choice and more of a necessity. Whether you are closing for business or
personal reasons, efficient planning will come in handy as you slow down your
business activity, and again when yo;re ready to restart your business one day.
Plan Your Timeline
When temporarily closing your business, you will need to
figure out a timeline. Are you planning to close for a few months, a few years,
or indefinitely? The timeline is a crucial part of the checklist because it dictates
how much planning is necessary. Deciding on the duration your business will be
closed depends a lot on the reason why you decided to close your business. If
you are taking a few years off to go back to school full time, you may only be
closing your business for a few years. If you close due to health concerns, it
may be a few months before you feel like run your business again.
An option if you are stepping away long-term would be to
transfer your business to another person. This is a good option if you have
a loyal customer base and you feel that you may want to come back in a few
years. It may be better for you to dissolve
your business and then, eventually restart
your business when you are prepared to do so.
Notify Affected Parties
Keeping affected parties in the loop will make temporarily
closing your business much smoother. You can come up with tailored list for
your business, but generally, there are five parties you will need to speak
with. Ask each of them if there is anything they need from you and explain how
you can be contacted if any concerns do arise.
protect your finances and reputation, ensure that you cancel all licenses and
permits that you will no longer need. Contact your state business licenses and permits
office and tell them
how long you plan on being closed. They would be able to advise whether you
need to cancel and provide the appropriate cancellation forms.
You need to figure out how and when you
want to tell your employees that the business will be temporarily closing. If
you are afraid of a mass exodus, you may only want to tell key employees and
tell the others closer to the date. Generally, the more time you can give
people to get their own affairs in order, the smoother the transition can go.
Helping your employees with references and connections can help keep morale up.
Remember to consider your employee- last paychecks,
and keep in mind that some states require you to pay out any unused vacation
days. Speak to your attorney or contact your local Equal Employment Opportunity
Commission for details on the employment laws in your state.
Advisors, Accountants, and Tax Specialists.
Your professional service providers will
need to know what you want them to do while your business is closed. There may
be tax and financial related reports due even while your business is closed.
Come up with a plan including communication frequency and new responsibilities.
Simply not reordering your supplies may put
your suppliers in a whirlwind. Keep those relationships strong with your
suppliers. When you restart your business, you will be relying on your
suppliers and you do not want to burn bridges.
You will be responsible for any debts you
may have. Temporarily closing your business does not exempt you from making
payments. Contact all of your creditors and tell them you are temporarily
closing your business. Try to work out a payment plan that will work well with
you and your business.
If you have the means, your customers
should also be contacted. Explain how product or service support will be
handled while you are closed, the duration of the close, and consider providing
recommendations to other businesses. Remember that customer loyalty is
important, especially if you plan to reopen your business after a while.
Lower Costs as Much
Keeping your costs low while you business is closed is
important. With proper planning, most costs should be able to be cut completely
or reduced. Here are four costs that should be lowered:
If your business is currently renting,
contact the landlord and discuss options you have. Ask if you can get out of
your lease or sublease your space to another business. Rent is usually one of
the largest costs and carrying it can get expensive.
Depending on your timeline, consider
selling your facility if you own it. This would cut your costs drastically
because you will also be able to lower or cut most of the expenses associated
with the facility such as security, insurance, and maintenance. If you cannot
sell your facility, you may consider renting it out to any business. There are many
seasonal businesses, such as political campaigns and short-term contractors,
looking for temporary office space.
Again, depending on your timeline, having
utilities shut off can save your business money. Remember that if you are
renting, property owners may require you to have essential utilities kept on
for safety and maintenance. If your office is in a cold environment, having no
heat may cause pipes to burst.
Comb through your subscriptions and see
which can be canceled or suspended. Some newspapers and magazines make be able
to give you credit and start the subscription after you reopen. Remember to
consider other types of subscriptions such as online databases, IT services,
and services related to software (scheduling and payments).
Contact your insurance company and tell
them how long you are planning to be closed. They may lower your premiums to
reflect the changes. Figuring out what insurance you need to continue and what
insurance you can go without can be discussed with your agent.
Schedule and Prepare
To avoid fees or fines, staying organized while your
business is closed is important. If you are temporarily closing your business,
you are still responsible for submitting the required reports to your local,
state, and federal government. Contact your state and create a calendar of when
certain reports are due.
Report your taxes even though you do not have any revenues
or profits. If you do not submit anything, your state and the IRS will be
expecting a payment. Late fees and penalties are applied and when you restart
your business, you will be responsible for those.
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