Your business isn’t going to last forever. You’ll eventually have to retire and leave your business to another person. In some situations, an unfortunate event might happen that will force you to close your business down. Whatever the reason might be, your business will eventually have to go.
The expected life span of a small business is five years. During those five years, you’re expected to reach your goals as a business, may it be financially or non-financially. At this point, you’re expected to either liquidate or sell liquidate or sell your business to another owner. It’s up to you to make this decision. Afterward, you can start a new business, better than the one you had before.
The Liquidation Process
Liquidation can be challenging for most business owners. However, you must know about it before starting your business. The idea of liquidation is simple: it’s the process of distributing your assets once you’ve ended your business. It usually happens when a company is insolvent or can’t pay its debts.
If your business has become insolvent, don’t worry, it happens to a decent chunk of small businesses. You have to go through the motions of the process and make it to the other side. Usually, small business owners try to spend as little as possible during this time until they can liquidate their assets and start a new business from them. So try to keep your head down and your spending low as you liquidate your business.
File for Bankruptcy
Filing for bankruptcy is the first step in the liquidation process. To start this process, you’ll have to determine whether you are eligible for bankruptcy or not. Some online calculators can calculate whether if you are eligible for bankruptcy or not. However, if you are not aware, those eligible for bankruptcy are those businesses whose income is lower than the state’s median income. If this is the case for your business, then you can file for bankruptcy. After you file for bankruptcy, there is a process that needs to be done. This process is where you have to settle with your creditors.
Settling With Creditors
For many insolvent businesses, liquidation means that they can’t get anything out of their business anymore. Because many of their assets go to creditors before they are distributed to the business owner, however, in some cases, business owners can get a decent chunk of their assets back during liquidation. This all depends on the agreement you have with your creditors. If you have the means to pay some of the debt you have, may it be through personal means, then you can get some of your assets back. Just make sure that this solution isn’t going to put you more in debt.
Selling Your Business
If your business is considered solvent and you think it’s reaching the end of its life, then congratulations, you can sell your business to another owner. The usual goal for most small businesses is to grow big enough to sell in the market. There are various ways to do this.
One of the ways you can do this is to auction your business. Auctioning your business means setting your sales presentation and talking to potential buyers. It can be tough to find buyers, but if your business is known enough in the community, then you’ll probably have offers way before you even want to sell your business. Consider contacting these buyers and ask them if they are still willing to buy your company.
Another way to sell your business is to find big companies willing to absorb your company. For example, if you plan to sell your audiology practice, some firms buy small businesses and absorb them. You can sell your business to them at a profitable price. These big companies will handle your business the best way they can, so by the end of the agreement, you shouldn’t regret selling your business to them.
The last way to sell your business is through voluntary liquidation. Solvent companies can still liquidate their assets. It technically means selling your company back to you and other shareholders if you have some. Unlike insolvent companies that choose to liquidate their company, solvent liquidation means that you can get something out of the liquidation process. You can usually get a decent amount of money by liquidating your business on top of whatever revenue you might for the last few years of operation.
The end of your small business isn’t the end of everything. You can always start a new and fresh start. Chances are, this fresh start is going to be better than before. So be optimistic about the future and where it will lead you.