Disaster response: Closing your business
When suspending your business operations, there are a few key steps you’ll want to take.
If you’re like most business owners, you probably dreamed of opening your own business for years before actually doing so. And like many of your peers, you might one day face the reality of having to temporarily close your doors due to an emergency.
Regardless of the cause for your business closure, there are common things you may want to do before turning out the lights and flipping your sign from “open” to “closed.”
1. Notify your employees.
Your employees are the lifeblood of your business. It’s important to be honest with them. Explain the reason for closing, answer any questions and keep them posted every step of the way on the road to reopening. Not only is it the right thing to do, but it’s also a smart move if you want them to return to work once you reopen.
- Schedule a meeting. If you can’t have an in-person meeting at your place of business because of safety issues, damage to the building or health concerns, invite them all to a video meeting, call each one and have a conversation, or use an automated calling system.
- Provide benefit information. If employees are eligible for COBRA health coverage or unemployment, give them the information they need to apply right away. Each state has different unemployment requirements, so check with your state for specific information and filing deadlines.
- Communicate often. If employees are unsure of their future employment, they may be more likely to seek out other work and be unavailable to return once you reopen. Be sure to stay in touch with employees, and ask them about their employment status so you know whether you have to start looking for other help once you get closer to reopening.
2. Communicate with your customers.
Just as you would promote the grand opening of your business to entice customers to visit, it’s important to let them know when you are closed — even if it’s temporary. Consider the following ways to get the word out.
- Place signage on your front door or windows. Be sure to say that you’re temporarily closing, and provide a reopen date if you have one. This will help prevent customers from assuming you’re closed for good when they show up and the doors are locked.
- Post updates on social media. This is a fast and easy way to get the message out. And it lets your followers spread the word even further by sharing your posts with others.
- Make it personal. If you have a customer database, send emails or make phone calls to some of your best customers. This type of personalized communication can go a long way toward making customers feel valued.
- Update your Google profile. Keep your business hours and status on your Google Business Profile current to provide customers with an easy way to see if you’re open. You can indicate whether your business is open, temporarily closed or permanently closed.
- Recommend other businesses. You may want to provide alternative solutions for your customers’ needs while you’re closed, whether it’s another local business or an online option. The past few years have been tough on everyone. Many customers will appreciate your efforts and continue to support you.
3. Contact your vendors.
Regardless of what type of business you have, you most likely work with vendors who provide products or services, often on a regular basis. Be sure to notify them of your temporary closure before your next scheduled delivery or service.
- Stop any standing orders. If you have standing orders with vendors — or even if you don’t — it’s a good idea to reach out and let them know your circumstances. They may be willing to work with you to waive fees or provide payment options on any outstanding invoices if they’re aware of what’s going on.
- Return unused inventory. Ask your vendors whether they are willing to accept any excess inventory that will just sit while you’re closed, especially if it’s perishable.
- Have a liquidation sale. If you have any inventory that can’t be returned to your vendors, consider selling it to your customers at a discounted rate. Some profit is better than none.
- Consider your space. If you’re leasing your building, you may want to contact the leaseholder to discuss whether you can work out new terms or sublet your space until you reopen.
4. Reach out to financial professionals.
Temporarily closing your business may have financial implications beyond your earnings. Your accountant or financial advisor can help you stay on track for your current and future goals.
- Speak with your accountant. Let your accountant know whether employees are being temporarily laid off or furloughed or you plan to keep any employees on the payroll part-time, as all of this will affect payroll taxes.
- Talk with your business banker. Discuss how to preserve cash flow during your business closure.
- Consider financing. Talk with your banker about whether business financing may be a good option to hold you over during your closure.
5. Check your insurance policies.
Contact your insurance agent to find out about your specific policy. You may be covered for losses incurred due to a temporary closure beyond your control.
- Inquire about your coverage. Ask your agent whether you have “interruption of business” insurance. If you don’t have this type of coverage, you may want to adjust your policy in case you ever need it in the future.
- File a claim. If your closure was due to a storm, flood, hurricane, tornado or any type of weather event or natural disaster, you might be covered.
- Assess the damage. If you are able to file a claim, you will most likely be required to document any losses. So be sure to take inventory, pictures and copious notes. Don’t clean up, rebuild or throw away any items or inventory until after the insurance adjustor has completed their inspection.
6. Suspend any unneeded subscriptions or services.
Keeping the lights on is part of every business’s normal operating procedure. But when it’s not in operation, many of your services don’t need to be either.
- Pause utilities. Contact your cable and utility companies to let them know your business is temporarily closed. They can often put a hold on your services and associated fees until you’re up and running again.
- Cancel subscriptions. Check if any monthly or quarterly subscriptions may still be on autopay. Go through your bank statement to search for recurring payments you may have forgotten about, and put a hold on any you don’t need, such as streaming music and video services, software licenses and trade publication subscriptions. You’ll be surprised how much money you can save.
- Stay secure. One service you don’t want to turn off is your security system if you have one. Having the alarms and cameras working can be more important when a business is closed.
7. Keep running your business.
Even though you may be closing your business temporarily, you still have many associated responsibilities, including filling out and filing tax, unemployment and payroll forms.
Speak with your accountant or financial advisor about federal and state laws and any applicable extensions you may be eligible for.
We’re here to help
When disaster strikes, you may have more questions than answers. You’re not alone. Our Disaster Response Series was designed to help you plan your next step (and the one after that) and provide many of the tips and resources you may need — right at your fingertips.
For more ways to help your business survive during challenging times, speak with a Chase business banker.
