ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Close a Small Business - A Personal Experience - Part 2: The Research

Updated on January 26, 2017


This article is an on going series on how my wife and I went about closing our small business. It based on our research and experience and is intended to show what we faced and how we handled the hundreds of decisions along the way. It is not intended to provide legal or tax advice, and you should always consult your own professionals. By sharing what we experienced, we hope our experience can make this part of owning a small business easier for others . We hope to share both the factual and emotional ups and downs along the way. This is the second article in a planned four article series.

The Research

After making the decision to close we had to figure out what that really meant. Luckily (or unluckily) as part of a franchise we had the experience of other stores to reference. We were not the first to close our franchise. That said, every one's experience is unique and one of the first thing we did was to consult with our accountant and lawyer to get some advice. They have known and advised other business owners in similar situations and are familiar with the locals laws in your area.

There's a lot that you can do on your own, but its important to get the right legal and tax advice as you close your business. Also, what we found may not apply to your situation so always consult your own advisers.

Using The Internet

Another normally useful tool in research is the Internet. Using Google to search for closing your business comes up with millions of hits (25,300,000 last time I tried). The problem I found is most of these links are for someone trying to sell your their service. Since we were going out of business and had to conserve our cash, this was not really useful.

There are some good sites including the IRS website (note- Most checklists you find on the Internet are just copies of the IRS website's checklist). I included a link to the IRS checklist as well as a few other sites I found useful. Also, the Small Business Association has some useful information. Your state may also have information on their website.

In general, outside of the general checklist I did not find too much useful information on the process. I came up with my own checklist that covers our initial closing plans and augmented this as we went along.

I included a copy below with some minor changes to keep it a little more general. I would not consider this 100% complete and every one's situation is different but it may give you a start. My list started much shorter and as I discussed our situation with our advisers, this list grew close to what you see here.

Our Closing Checklist

  • Speak with our accountant
  • Setup meeting with Lawyer to discuss our options and liabilities, Get advice on approaching Landlord, Discuss bankruptcy options
  • Review vendors we pay money to and any contracts.
  • Review outstanding liabilities that are business and that are personally obligated.
  • Meeting with Bankruptcy lawyer and review options
  • Prepare inventory of all big ticket items in store - Slick sheets with pictures and descriptions.
  • Review options for lease. Create break even spreadsheet for carrying costs vs. offering a buyout.
  • Meet with Landlord and discuss closing options and if he is willing to work with us.
  • If willing to work with us, prepare an offer based on advice from counsel and our break even analysis
  • Confirm with Lawyer on lease offer letter
  • Talk with Store Manager about closing - Offer incentive to stay through June
  • Post on Craig's list for sale (for one final try)
  • Schedule 2nd Meeting with Landlord and present offer. Try to negotiate an agreement and get commitment to a general release from liability.
  • Set closing formal closing date
  • Send email / notice to customers on closing and reminder to use gift cards before we close
  • Contact vendors with recurring services and advise on closing date. Send form letter.
  • Schedule sign removal
  • Research best way to sell assets - Craig's list, Auction, Sell to equipment supply, Complete trade study based on other stores experiences
  • Create cash flow analysis for see how much money we need and when
  • Arrange for financing of closing debts
  • Finalize plan to sell equipment – List on Craig’s list
  • Inventory all small goods to offer for sale and make price list
  • Send email to customers for small good sales.
  • Move any items that will be kept
  • Get contract from fast track auction and review, if items don’t sell on Craig’s list plan to setup online auction
  • Follow up with landlord and lawyer on general release docs
  • Open PO Box and change of address
  • Schedule utilities for disconnect or transfer - Phone, Electricity, etc..
  • Contract with Fast Track Auction (if needed)
  • Send out emailer to customer base on last week of closing.
  • Last day, hold a “yard sale” to sell off any remaining goods
  • Clean up space prior to turning over store
  • Last equipment sell off once operations are completed
  • Move any remaining items to storage or consignment
  • Cancel website
  • Stop any automatic payments
  • Turn over Store to Landlord
  • Cancel Insurance
  • Cancel Permits with State, Sales Tax, Etc
  • Submit final sales tax forms
  • Dissolve Business (by end of year)

An example of our action plan - Took checklist and added due dates and assignees.  Used Google Docs to allow easy sharing.
An example of our action plan - Took checklist and added due dates and assignees. Used Google Docs to allow easy sharing.

Working the Check List - Our Plan

The checklist formed the foundation of our closing plans. We added due dates and assignees to the list in Excel and daily kept track of our progress and added items as they came up. In our situation, we decided to take about three months from the first meeting with our advisers to close the store. We both had full time jobs to manage and needed the time to get all our tasks done.

Having the list and setting the closing date goes a long way to feeling like things are moving forward. When we first made the decision to close we felt this overwhelming sense of too many things to do and no clear idea on where to start. By creating our checklist and adding due dates and assignees, we developed our action plan to move forward. Each time we marked something done, we knew we were one step closer to our goal of closing the business.

Dealing with Our Liabilites

In this area, I think every one's situation is unique but by sharing our experience it may help you. Like most small business we had both business liabilities and personal liabilities. A quick summary of the major items are listed below:

  • The Lease which was personally guaranteed (and 10 years!)
  • A home equity loan against our house
  • A HELOC against our house
  • Personal loans from our family
  • Gift Card obligations
  • Credit Card Debts

The most difficult liability was our lease, which we personally guaranteed. We also had borrowed against our home to open our business. Both these were related to the business but also a personal obligation. Even if we went through bankruptcy for the business, we would not eliminate the biggest obligations and personal bankruptcy was not an option for us. Every one's case is different and if you must go through bankruptcy, please get good legal advice.

The home loans were ours personally so we planned to just keep paying these debts. My wife and I both have good jobs and can afford to pay these. Unfortunately, when we tried to consolidate these to a single mortgage we found the housing recession has also hit us in upstate NY and our equity to loan value with all the loans was over 90%. We were not under water but we would have to pay PMI to refinance. So for now, we will pay down this debt till we reach 80% LTV then refinance at a later date.

Our personal loans from family will also be paid back once we get back on our feet. Our family is understanding and is willing to work with us on paying back these debts. We will make our family whole on these debts and hope to do so within the next 18 months. We will be working the Dave Ramsey's Money Makeover plan to work down all our debts...

The business obligations were the most onerous and we will discuss these including the lease in our third segment - Part 3- Liabilities and Assets. We were able to reach an agreement with our landlord we both found acceptable and will discuss that in more detail.


    0 of 8192 characters used
    Post Comment
    • BizVT34 profile image


      7 years ago from USA

      Negative cash flow businesses are indeed difficult to sell and a franchise is even more so. Sometimes we have to tell people their best option might be an organized closing. I'll certainly send those people to this Hub.

    • pschmitt profile imageAUTHOR


      9 years ago from Rochester, NY


      Good point. We did work with a broker initially and valuations were typically based on profit or net cash flows (which were negative in our case) or sales. It is very difficult to sell a negative cash flow business even with ok revenue stream especially in a down market.



    • Diane in Atlanta profile image

      Diane in Atlanta 

      9 years ago from Atlanta, Georgia

      This is really a very comprehensive, excellent list. I have closed a small business before, but since my businesses have all been service oriented, I didn't have to go through any of these big decisions you and your wife had to make.

      However, if I had been more knowledgeable, I could have sold my business, even in a down market.

      A really needed article would be one on business valuation for the purpose of sale.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)