If your business is struggling, the decision between closing and rescuing it can be a hard one. You might even be wondering to yourself, ‘Is now the right time to close my business?’. In this guide, we’ll help you to make an informed decision by examining the circumstances in which it might be wise to close your business, and the times when rescue may actually be a more appropriate solution.
Why Might I Choose To Close My Business?
Business circumstances and the external environment are always changing. Often, this will go in your favour and bring both tangible and intrinsic rewards. However, there are also times when running your business will feel incredibly difficult. You may even find yourself wondering if you should cease operating the business.
As with any major business decision, you should never rush to make a step as serious as closing your business. However, there are certain circumstances in which company closure is a sensible next step. These include:
Unsustainable Financial Position
If your financial records are showing consistent losses with no turnaround plan having been successfully implemented, this is a sign of a seriously dangerous position for the business. Businesses with a strong cash reserve can potentially weather periods of loss for a time, but it may come to a point where these funds are only able to buy time and do little else to facilitate a recovery. At this point, it is much better to accept your losses as quickly as possible and shut down with a proper business closure procedure.
Personal Wellbeing
The stresses of managing a failing business can take a serious toll, especially if the business has been enduring hardship for an extended period of time. From a well-being perspective, it may make a lot of sense to call it quits and seek business closure. Losing the passion and drive to pilot your business to success is an entirely valid reason to decide to close down your business.
Repeated Pattern Of Difficulties
If you’ve faced repeated patches of difficulty over the lifetime of the business and none of your changes have made much of a meaningful improvement, then it’s likely there’s a fundamental problem with something at the core of your business. It may be that under current conditions, the business is not viable, and the most logical move is to shut down.
What Reasons Should I Choose To Rescue My Business?
If your business is struggling and company closure is a genuine consideration, it is still vital that you think carefully about your next steps. Some of the key challenges that might lead to company closure can actually be solved with the right proactive attitude, and you may find that a carefully planned business rescue strategy can actually breathe life back into your business in the following circumstances.
Problems And Solutions Are Clear
If the problems that the business is facing are clear and you understand the solutions you need to implement to solve them, then there’s a good chance it’s worth undertaking a business rescue venture. As long as the solutions are realistic and can be implemented at a good speed, then a rescue is generally advisable.
Factors Remain In Your Favour
While your business may be facing a number of challenges at the moment, if you have a number of key advantages at your disposal, it may be possible to shift focus onto them and adapt the business to suit its current position. Assets with underutilised potential, untapped markets to explore and well-performing products that you can shift focus to may provide the opportunity to restructure their business around its current environment and return it to being profitable again.
A Business Rescue Expert Believes It Can Be Saved
If you’ve spoken to a licensed insolvency practitioner about your business’s likelihood of survival and they have deemed it worth attempting to save, then undergoing a business rescue process instead of business closure is likely to provide you and your shareholders with better results than going into liquidation.
If you’re still weighing up the ‘should I close my business or rescue it?’ question, then get in contact with us today. At Ballard Business Recovery, our speciality lies in assessing businesses to determine whether it’s practical to save them and either help you recover or close your business in as simple a manner as possible. The sooner you reach out to us, the more we’ll be able to do to help.
