In a competitive free market economy such as ours in the U.S., businesses sometimes need to shut
down. As in most business operations, there is a right way and a wrong way to do it. The following is
what I believe is the right way.
1. Business owners and managers should anticipate the shutdown as far in advance as possible. If
they do, they maintain flexibility to conduct the shutdown in an orderly manner with least
adverse impact on employees and owners.
2. Schedule a meeting of all owners as required by the business’s by-laws and get the required
owner share votes approving the shutdown. Try to get a 100% vote if possible, to avoid later
disputes.
3. Retain a good business lawyer with business shutdown and liquidation experience to advise.
Likewise, retain a good accountant to advise.
4. Make a list of all current, unfinished customer contracts or orders with the completion date.
5. Make a list of all business debts with the due dates.
6. Make a financial analysis to determine if the business will have enough cash to complete all
customer orders and pay all debts. If so, notify each customer that their order will be
completed as promised. Notify all lenders that their loans will be paid when due. This will help
avoid unnecessary lawsuits which will only complicate the process and consume cash needed
for the shutdown. If not, consult with your lawyer advisor, bankruptcy may be necessary.
7. Refer to #4 above. Prepare an employee termination schedule. Notify each employee, face to
face, and thank them for their service. Absolutely! Do not blind side them on the termination
date. In my career, I found employees can cope with bad job news, if notified in advance and
kept advised. Yes, you risk employees leaving early and leaving you shorthanded. If so, do what
good managers do, reorganize and match resources to demands to get the job done.
8. Refer to #4 above. Make a schedule when each business asset will be available for sale.
9. If competent brokers are available, retain them to conduct the asset sale.
10. If brokers are not available, select your best qualified staff person and designate them as the
asset sales manager. Conduct a marketing and advertising campaign.
Ralph Coker