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 consideration.
There may be many reasons to wind up a business – a natural disaster may just bring some of those reasons to the fore. Some of those reasons are:
- 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/poor location
- lack of planning for the reopening of the business
- 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 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
- forced closure – filing for bankruptcy or liquidation.
If you are considering closing your business, speak to your accountant or lawyer for guidance.
There are risks if you continue your company while it is insolvent. For information on the consequences of insolvent trading in Australia, visit the Australian Securities and Investments Commission (ASIC) website. The ASIC has a list of registered liquidators that are experienced in providing advice in the area of insolvency and reconstruction. Getting advice from a registered liquidator, or your accountant or lawyer to understand the complexities in this area is important.