Reviewing your Closing Down Options - The DIY Approach - By Benson O. Agoha

Since the recent financial crises started, you would have been amazed at the number of small businesses and stores that have served notice of intention to close down. Shortly afterwards, a closing down SALE begins. A couple of weeks later, `shop to rent’ is hanging on the door. This site is replicated in some other High street a little outside the city centre.

Business failures and subsequent closures represent different things for the various stakeholders – for the business owner, loss of investment; for the staff, loss of needed source of income and except there are other sources of income for the household, reduction in the standard of living as well; for the Local Council, reduction in income and business tax earnings; for the Politician, rising expectation from constituent members and for the country, rising unemployment, increase in benefit claimants and a gradual build-up of pressure on the social services. In addition, it might mean more expenditure for former customers who have to look elsewhere for satisfaction.

But except you have made up your mind to close shop, here are a few tips to consider.

1) Vision: Before you set out to run a business, you must have had a vision, what was it? Are you still on the right course or have you strayed in the course of time, without realising it. If you never bothered about writing down your vision, maybe it is time you did that. Visions help us to look in the long term where we would like to be and to think about ways (`strategy’, which I will consider later) of getting there in a certain future time. Write out your vision statement and hang it visibly so that anyone that walks into the office sees it. It tells people how serious you are and that you have focus.
2) Mission: There must also be a reason why you are in that business, what is it? Is it a good reason? Would you be happy abandoning it? Can you reform it? Unless you can look at your reason and say `I am still committed to it’, you may not find enough satisfaction to explore ways to keep you in that business. There was a story of a young Doctor who set up shop in a certain community because he was a friend of the mayor. When the Mayor died, he lost his interest and wanted to close down. Your reason for being in any business must be such that, even changes in time can sustain it.
3) Finance: One of the reasons organisations close down is due to declining income. When the business no longer sees enough income, and costs remain the same or are increasing, most entrepreneurs resort to closure. The most obvious would be for the owner to plough in more money into the business, may be from previous savings. Securing a loan from a bank, cooperative clubs or private sources like committees may help. But in a time of credit crunch, lenders may be unwilling to loan out money and may toughen the conditions attached to their loans. An organisation with a declining income may not be well advised to take a loan with a high interest rate. Under this circumstance, my advice is for the entrepreneur to look inwards. Has the business been saving a part of its earnings over the years? Can the business generate more income by exploring new markets? Consider the above before you take other drastic measures.
4) Exploring New Markets: Before you close down, consider if your current market has been saturated. Is the market so attractive to new comers that it has become flooded? Do you now face more aggressive or bigger competitors? Consider whether there are ways to increase your current market share without closing down. Consider if you can introduce your business or services into other areas that have not yet been tapped and consider also if a bit of personal selling will do well to bring in more business. See if you can repackage your service or product in a way that takes into consideration your customers’ current purchasing power. Find out what their complaints are and see how you can address that. You may be surprised at how quickly your fortune turns around.
5) Downsizing: Downsizing the staff strength of a business, no doubt saves cost, but it is worth considering whether that should not be the last resort? My recommendation to business owners is to explore all avenues necessary to stay in business. Consider whether you can temporary redeploy your staff to other duties in the meantime. Explain to them, your current situation and find out from them if they are willing to also take a pay cut for a while. If they report for work thereafter, it shows they can do more to keep the business alive. My former boss, Mr. D. Quittkat did not resort to sack when our company experienced a bit of a hard time. One day, I walk into his office and found him crying. Business had taken bad turn and he still had to meet up with costs. I went back to my office and had a reflective quite moment. We explored our options, introduced some measures and with time, recovered to secure more mouth-watering contracts. He rewarded me with lavish overseas trips and performance related bonus.
6) Review the Corporate Image: It is important to find out from time to time what your staff, customers, community think about your business. Opinion helps you analyse options available. So before you decide that the last option is to close down, consider if your business needs a make over. The Signboard in front of your shop, does it need cleaning, rewriting or do you now require a Neon Sign? When was the last time you distributed flyers and leaflets telling people what you do and where you are? Are your telephone numbers changed and you have not informed your customers? The image of a business is very important because a lot of the organisation’s goodwill is hidden there. In this regard, your current staff may do well to do a bit of canvassing, carrying the flyers with them. Does your Logo need redesign? Mr. Joseph Orji, Managing Director of Blackberry Global Limited, London, knew what to do in a period of dwindling income. He decided that he was in business to succeed and would not resort to downsizing. He had the company Logo redesigned and printed flyers. Luckily he had an understanding and willing staff who took the distribution seriously. The result was fantastic, new customers were pulled in and old customers increased their patronage. A new reflective Signboard was made and the outstanding organisation of activities in the Company restored customer confidence and took the business income to an upward curve. Blackberry Global Limited became a Cargo Company of first choice to their customers.

7) Compliment Your Staff: When your survival strategy involves your loyal staff, do not forget to compliment and protect them when and where necessary. Family businesses sometime make the mistake of failing to protect their key staff from abuse and insults. It is only when they loose what has been part of their strength that they realise how important certain staff had been to their business. Ensure you remember your staff when you have successfully turned your business around. You never know when you will need them again.