Exiting your business

Most disaster-affected businesses will reopen in some form. But others will close. This is a legitimate business decision that should be considered.

There may be many reasons to wind up a business – a natural disaster may just bring some of those reasons to the fore. Some reasons include:

• having insufficient funds to recommence or continue operating
• carrying too much debt and being unable to service it
• having inadequate cashflow
• offering an insufficient range of products or services or the wrong range of product and services following a disaster
• having insufficient sales
• being in a poor location
• lacking a plan to reopen the business
• lacking the ability to adapt to the new environment
• having poor credit controls or inadequate debt collection
• suffering ill health 
• losing the passion to run a business.

There are several ways a business owner can exit their business, including:

• selling the business
• closing the business. This involves selling assets and ceasing trade.
• passing the business on to a family member, partner, employee or other stakeholder
• merging the business with another business
• filing for bankruptcy or liquidation.

If you are considering closing your business, speak to your accountant or lawyer for guidance.

There are risks if you continue your company while it is insolvent. For information on the consequences of insolvent trading in Australia, visit the Australian Securities and Investments Commission (ASIC) website.

ASIC has a list of registered liquidators that are experienced in providing advice in the area of insolvency and reconstruction. Getting advice from a registered liquidator, your accountant or lawyer to understand the complexities in this area is important.