Exiting your business

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Disaster recovery toolkit

Exiting your business

Most businesses affected by a disaster will reopen their business in some form. Some businesses affected by a disaster, however, will close. This is a legitimate business decision that should be part of your considerations.

The reasons a business may be wound up are many – a natural disaster may just bring some of those reasons to the fore. Some of those reasons could include (and many of these reasons are linked):

  • having insufficient funds to recommence operations or continue operating
  • carrying too much debt and being unable to service that debt
  • inadequate cashflow
  • an insufficient range of products or services, or the wrong range of product and services following a disaster
  • insufficient sales or poor location
  • lack of planning for the reopening of the business and an inability to adapt to the new environment
  • poor credit controls and inadequate debt collection
  • ill health of owners and key employees
  • no longer having the passion to run a business

There are risks if you continue your company while it is insolvent. For information on the consequences of insolvent trading in Australia, please visit the Australian Securities and Investments Commission website. Alternatively, your accountant or lawyer can explain the risks to you.

There are several ways a business owner can exit their business, including:

  • selling the business
  • closing down the business – selling assets and discontinuing trading
  • passing the business on to a family member, partner, employee or other stakeholder
  • merging the business with another business
  • liquidating – liquidating the business and selling off the assets
  • forced closure – filing for bankruptcy or liquidation

Also refer to the Guide on Exiting Your Business (PDF)