I love analogies. Within those little sayings are embedded a grain of absolute truth. But also, a hidden cause. For example, the old phrase, “Grin’in like a mule eating saw-briars” invokes the perceived nirvana of unbounded happiness the likes of which cannot be contained. The real issue is that the mule has a bunch of briars stuck in his gums and teeth that prohibit the equine from closing his mouth. Yet, some of these oft beloved sayings are spot on. In fact, they are so truthful, it’s scary.
Fancy this one: “It’s far easier to start a business than it is to end one.”
I’ll give you a pause to soak that in. I’m speaking to the heart and general condition to such a huge audience of aftermarket parts businesses. Businesses that have no exit strategy. My voice echoes their secret thoughts and private worries.
As independent owners, what is the next thing in your life? Are you gonna sell spark plugs until you die? Are you gonna continue to work seven days a week chasing a pay off? Are you gonna sell out for 25 percent of what your business is worth just to get out?
No kids to take over? No big guys willing to buy you out? Will you be so happy just to get an “offer” that you will sell off your assets for pennies on the dollar? Are you disillusioned, tired and brow beat? Maybe that’s nothing new really, it’s just gone on for a while, but you need to get prepared. This is about business, not emotion. Are you gonna close up? Well, here is what to plan for.
They probably know it’s coming. They are not dumb. If they are dumb, that’s a good reason you are closing up. Treat them with honesty and integrity. Have a letter of recommendation ready for them, and it would be nice if you would contact other prospective employers on their behalf after the closing. You might be financially prepared, hopefully, but they will probably not be in the same position.
If you provide health insurance, try to cover them for a couple of months. It’s the right thing to do if you can afford it. Also, pay them for any benefits accrued. They earned it, give them their due. Plus, it’s illegal not to. This initial hit to the cash available to the business may be quite large, but, suck it up butter cup. You need to think about this in your “exit strategy.”
You will probably owe most of them some money. You gotta plan for that too. Building up to the date of closure, limit you reordering. Think a few months ahead on this. There’s no need to re-order an item you sell once a year. This will also add to your cash on hand. If you have consignment items, be sure to replenish them. If you don’t do it, you will still owe the money, and reordering will actually help you budget consignment costs of getting out of business.
If you have inventory on terms, call the vendor, let them know what is happening. Come on man, you cannot walk away from these guys. They have a vested interest, and a right to their inventory. They will come and get it. It’s theirs.