If you've started a small business, congratulations. But be warned: The talents you need might eventually include figuring out how to shut it down.
According to the Small Business Administration's Office of Advocacy, only half of the nation's small companies stay open for four or more years. That figure drops to 40 percent for companies six years or older.
If, despite your best efforts, your business doesn't survive, it's worth contemplating how to exit gracefully, without burning business or community bridges.
True, much of closing a business is common sense, says Irene Hurst, director of the Small Business Development Center at the University of South Florida. Employees must be told as well as customers and vendors. The state, too, will need notification if you're incorporated.
Boland says to tell employees of the closing before telling anyone else. But shuttering a company requires common decency, too, says Suzie Boland, president of RFB Communications Group in Tampa. Just telling someone you're closing isn't enough.
Boland speaks from experience. She recalls working as the human resources director for an organization that was running out of money. When employees' checks began bouncing, she contacted banks and the places where the workers had written checks, telling them the employer was at fault. Employees were compensated for any overdraft charges. They also had access to round-the-clock meetings where they could ask questions and get information.
"It was a horrible situation," Boland says. "We really tried to do the right thing for them."
The right thing includes telling employees that a company is closing before telling anyone else, Hurst says. They shouldn't hear about it from suppliers, clients or people on the street. "It's not a good idea to just close down and not tell your employees," she says.
Neither is it a good idea to close without honoring contractual obligations. If you're closing a business for some reason other than bankruptcy, observe cancellation clauses with your vendors and customers, Boland says. If you do see bankruptcy looming in the future, avoid incurring any expenses you can't pay.
"You don't all of a sudden wake up one day and realize you're on the verge of bankruptcy," she says.
Taking care to tie up loose financial ends can help you in the future. Most people stay in the same geographic area and the same industry during their careers. The vendor you stiff today may be the one you need in your next job.
Closing a business doesn't mean the end of everything associated with that business. If, for instance, you serve on community or civic groups, don't assume those organizations won't want your continued involvement.
"Some people are there by virtue of their position; some people are there by virtue of their ability," says Kim Scheeler, president of the Greater Tampa Chamber of Commerce.
Ask whether the organization's leadership wants you to resign, says Scheeler, former head of Tampa's United Way. He remembers when a board member there left a large company to begin a small business. The man approached Scheeler, asking if he should stay with United Way or leave. Please stay, Scheeler said.
"He just came in and laid it on the table," Scheeler recalls. "It really showed a lot of integrity and a lot of class that he did it that way."
Two other constituencies you need to consider when closing down: By all means, alert investors or shareholders, face-to-face preferably, Boland says. And if you're large enough and have attracted press attention in the past, you may want to issue a brief news release.
Regardless of the reasons, shutting a business is never easy. The key is to treat those involved in the best, most gracious light.
"I so firmly believe people should do the right thing by their employees, their creditors and their customers," Boland says. "Put yourself in those people's positions