BLOG: Timeline for Suspending Your Business

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Many business owners who are members of the National Guard or Reserves make the decision to suspend their business during absences caused by training, mobilization, and deployment. There are many reasons business owners might choose to do so, but oftentimes suspending business is the only viable option, especially when there is no one else with the skill or knowledge to take over while you are gone. For example, artists, craftsmen or even independent truck drivers do not have the option to pass their business on to someone else.

Additionally, if you choose to close your business permanently, you may consider selling your business and should speak with legal and financial experts to guide you in the sale of your business. It is important that you prepare your deployment plan before you ever receive orders, because the steps to close your business will take time and you will need to begin implementing them immediately.

Intend to keep your business in operation during your deployment? Check out the post on Sustaining your Business.

Below are the steps to start creating a timeline; however, you should work with legal and financial experts and take advantage of the other resources offered in these posts to ensure you are in full compliance with all applicable state and federal laws.

Timeline

The first step in creating your plan is to develop a timeline. You will need one timeline for the shut-down procedures and another timeline that includes the steps to re-open your business when you return (we will cover the re-launch plan in our next post).

The timeline is based on the amount of time prior to deployment you will need to close your business. This includes taking care of financial and legal matters, distributing or storing your inventory, reducing your business costs to a minimum, and ensuring your business is secure. Obviously, it will vary depending on the size and complexity of your business. Your timeline should be comprehensive and include the following:

  • Amount of time prior to mobilization that you will begin to shut down operations, including the last date at which you will accept new orders, the cut-off for supply deliveries and the day you will officially close your business
  • Date you will begin liquidating inventory or moving it to storage
  • Date you will notify each key stakeholder -- employees, investors, clients, and other key stakeholders

Here is a list of people you will need to get in touch with and how soon you should notify them. Make a note of the types of people you interact with regularly and add them to this list:

  • Suppliers: Let your suppliers know when the last delivery will be made, if you will be returning any items, and your final payment schedule. Don’t tell suppliers too far in advance that you will be closing your business. Many suppliers will get wary and may require that all orders be paid full in cash, rather than allowing you to use a credit line or account.
  • Service providers: Notify your service providers to let them know the final day you will require services and to arrange your final payment. If service providers have additional questions about your business closing, be honest. Not doing so can leave you liable for damages if problems arise. Some service contracts will dictate how far in advance you will need to notify them of cancelled services; others, such as utilities, will not need to be notified until a few days prior to closing the business. Finally, find out the cancellation policies for each service provider to limit any cancellation fees.
  • Banks and credit card companies: Close out any business bank accounts and cancel your business credit cards. You may choose to simply suspend both of these items and should speak with your financial advisor before making a decision concerning your bank account or credit cards. Notify your bank and credit card companies as soon as you have spoken with your financial expert and have decided the best way to handle your accounts during your deployment.
  • Lenders: Begin working with your lender right away on the terms of any outstanding business loans. Your lender will want to know how you plan on paying off loans and may ask to look at collateral. Work with your lender as soon as possible to leave plenty of time for paperwork, loan adjustments, or other issues that arise.
  • Customers: Customers whose orders you will be unable to fulfill should be notified and all payments or deposits should be returned immediately. If your business does not take orders in advance, wait to tell customers who may stop coming to your business or utilizing your services. Word will probably get out once you have told your employees, but you do not need to announce this to the general public that early.
  • Employees: Employees will need to have adequate notification that the business is closing in order to adjust to the change, help you close the business per the deployment plan, and find a new job. If you fear a mass exodus of employees before you close your doors, don’t tell employees too early. Give at least two weeks’ notice and provide references when possible.

The truth is that you will never know how long you will have between the time when you receive your orders and you actually deploy. Therefore, your timeline must be flexible and must accommodate deployments with advance warning and deployments that occur without warning, such as in the case of natural disasters or emergencies.

Tip: In case of a short notice deployment you should have another person you can trust and understands your business be familiar and ready to implement the elements of your plan.

Once you have outlined the timeline for closing your business, you should write in more detail how you plan on taking care of your employees, inventory and the steps to re-launch your business upon your return. In the second part of Suspending your Business, we will provide you a guide along with some critical factors that you should consider.

References

The Veterans Corporation (2007)