These days, it’s not unusual to see eye-catching displays and glittering signs for “going out of business” sales. In the wake of the pandemic, around a third of small businesses have shut their doors on either a temporary or permanent basis.
But what does it actually mean to be “going out of business,” and why are so many companies nationwide advertising this status? Here’s what you should know about these shutdowns—and how they can be avoided.
What Does It Mean to Be “Going Out of Business?”
When a company says that it’s “going out of business,” it means that it is closing. In most cases, this phrase means that the business closure isn’t necessarily by choice; often, “going out of business” insinuates that the company is no longer profitable or has gone bankrupt.
How Can You Tell When a Company Is Going Out of Business?
In many cases, a company will advertise that it is shutting its doors. Because it’s in the business’s best interest to sell as many leftover products as possible, it’s also common for a store to put on an advertised sale to encourage customers to snap up discounted items. The advertising experts at frontlinemediasolutions.com note that professionally printed signs are a common way to increase visibility during this time.
Why Do Many Stores Go Out of Business?
Companies can go out of business for a huge range of reasons, many of which will overlap. There are a few common reasons why companies may be forced to close their doors.
For brick-and-mortar stores, the so-called “retail apocalypse” continues to play a large role in these closures, as online competition makes it more difficult to make sales. The decline of malls can also play a role in some cases.
For all business types, research has found that financing hurdles are the number one reason why businesses fail. Economic factors, poor financial management, or shifting demand can help strike the death blow. In addition, insufficient marketing, overexpansion, bad management, and poor planning are other common factors.
What to Do When You’re Going Out of Business
If you have to make the hard decision to close your business, it’s crucial to take the proper steps. The IRS has a full walkthrough of the legal and financial processes for shutting your doors for good. File the correct paperwork, check your state’s legal requirements, and don’t forget to advertise your going out of business sale to offload any remaining goods!
Protect Yourself From Business Shutdowns
Knowing what it means to be going out of business—and the factors that play a role—can help you avoid closing your doors like so many other US companies. However, if a business termination is the right choice for you, be sure to take the correct legal and financial steps to shut down your company. Don’t hesitate to reach out to an experienced local attorney to make sure you’ve checked all the correct boxes!
If you have to make the hard decision to close your business, it’s crucial to take the proper steps. The IRS has a full walkthrough of the legal and financial processes for shutting your doors for good. File the correct paperwork, check your state’s legal requirements, and don’t forget to advertise your going out of business sale to offload any remaining goods!
