If your business has been significantly affected by a crisis, you will need to consider the viability of your business. While many businesses do reopen and operate successfully after a crisis, some do not.
Estimates from the United States indicate that up to 40% of businesses never reopen following a disaster and of the remaining businesses, 25% will close within 2 years.
When assessing your options, it is important to seek guidance and advice from your business advisor, accountant or lawyer.
If you do decide to exit your business, there are several online resources available to you:
- Checklist to closing a business
- CPA's guide on exiting your business
- The Australian Government's advice on selling or closing your business.
Time to exit
There are several ways in which the business owner can exit from their business, they include:
- selling the business
- passing the business onto a family member, partner, employee or stakeholder
- merging the business with another business
- closing down the business – sell off assets and cease trading
- forced closure – file for bankruptcy or liquidation.
Take the time to assess each option carefully. Before you make a final decision, speak to your business adviser, lawyer or mentor and obtain financial and legal advice.
Consequences of continuing a business while insolvent
It's important to understand the risks if you decide to continue a business while it is insolvent. For information on the consequences of insolvent trading, speak to your accountant or lawyer, or visit the Australian Securities and Investments Commission.
