How to Construct a Letter of Business Closure

The most important decision that many business owners face other than starting a business is closing one. When you have decided to close your business, you will need to follow certain major procedures that will not only help you to properly terminate current business relationships, but will also keep you out of legal hot water. Among the business closure procedures that you must adhere to is the practice of constructing a letter of business closure. Your aim is to maintain a positive image with former customers and business contacts long after your business has closed. Therefore, the purpose of this post is to provide you with the necessary steps that will hopefully aid you in writing a powerful letter, and if done correctly, will keep you in good standing both ethically and legally.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Computer
• Internet Access
• Quality Photocopy Paper
• Copy Machine
• Email Address
• Business Envelopes
• Business Telephone Number with Voicemail
• Sample Business Closure Letters

1. 
   Provide a Date for the Business Closure

   Provide a Date for the Business Closure - As a matter of generosity towards faithful customers, not only will you need to inform them of your business closure, but also of the specific date that your business will finally shut its doors. You should inform all of your customers as soon as you know for certain that you will close your business with as much advanced notice as possible. Try to give them at least 60-days notice so that they can respond proactively in replacing your products and services before neither is any longer available for purchase. It might even be a good idea to recommend several of your competitors as a sign of goodwill. However, if you decide to do this, make a point of giving the names of your best competitors, and always list a minimum of at least three of them. Also, please be certain that your closing date falls on regular business hours, and not on a weekend or on a nationally-recognized holiday.

2. 
   Actions Needed for Business Closure

   Furnish Details of Actions that Customers and Suppliers Must Take - In most cases, you will need to inform customers and suppliers about action steps that they must take to either complete a transaction or secure leftover items from a previous purchase. For example, shareholders must be given clears steps on how to retrieve investment funds. Customers, on the other hand, must be instructed on when they can pick up their purchases, or on when to expect the delivery of goods. Also, suppliers need to be informed about copies of legal forms, receipts, and other documents that they must send to receive due payments. You will also need to give dates for “going out of business” sales in order to reduce inventory, and raise additional funds.

3. 
   Close All Accounts for the Business Closure

   Close All Active Accounts - In accordance with local law of many states, you will need to give suppliers and creditors at least 60 days prior notice of your business closure. Make sure that you use that time to settle all actives account, and close them when all fees and bill payments are satisfied. If you have any payments that are in arrears, you must either arrange an installment payment plan with your creditors or seek legal counsel to help negotiate a reduced settlement.

4. 
   Direct Questions for Business Closure

   Offer Information on Where to Direct Questions - Change often brings questions. Therefore, when announcing your business closure, you will need to provide contact information that will allow customers, suppliers, and creditors to forward their questions. The information should include a physical mailing address, an email address, a telephone with a live person on stand-by ready to take calls. If you normally close your office after business hours, make sure that you have a reliable 24-hour telephone messaging service so that customers and suppliers can leave a recorded verbal communication.

5. 
   Thank Your Customers

   Thank Customers for their Business - You should take the time to kindly thank everyone for their patronage and loyalty. Tell them that they are the primary reason for your success. Also, state that it has always been your mission to provide the best possible service to them, and that you hope that you were successful in reaching such an endeavor. You might also want to add that your association with them has taught you a great deal about the importance of valued customer and business relations, and that their patience and consideration are immeasurable. Then state that you will always be grateful to them for granting you the opportunity to improve your products and services, provide a great benefit, and upgrade your status as a business professional.

6. 
   Provide a Reason for the Business Closure

   Decide Whether or Not to Provide a Reason for the Business Closure - The circumstances surrounding your business closure will ultimately determine whether or not you should or need to provide a reason for shutting down operations. While there is no known legal requirement to provide a reason, you will need to use your best judgment when making such an important decision. As a rule of thumb, you should consider disclosing a reason under three conditions. The first is that the reason is delightful news such as a retirement to pursue a lifelong dream, newfound wealth, or a spiritual endeavor. The second is that the reason relates to distressing matters that may affect your customers or suppliers such as a pending court judgment, unresolved bad business debts, or unsatisfactory changes in industry practices. The third is that reason is personal in scope and would most likely garner empathy on your behalf such as health-related issues, death in the family, or an unexpected and life-threatening event that resulted in a permanent physical disability. Reasons that are related to such personal matters like divorce, drug problems, emotional burnout, or a personal bankruptcy should not be included in your letter.

7. 
   Build a Strong Ending for Your Letter of Business Closure

   Build a Strong Ending - When ending your letter of business closure, you will want to close with a strong finish. For example, you might want to state how awfully saddened and disappointed you are about your business closure, and how you will miss the wonderful relationships that you have built over the years. Express your sorrow in no longer being a major player in your industry, but that you have no regrets in turning the reigns over to equally capable hands who will deliver as good a service as you hope you have done. Make you customers and suppliers feel special by identifying what you have noticed to be their greatest assets, and how such assets made working with them a pleasant experience. Compliment them on their friendly and excellent staff, and thank them for their quick responses to questions and dilemmas. In closing, wish them well, and state that you truly appreciate being in the company of some of the greatest individuals that you have ever encountered in your many years as a business owner.

8. 
   Proofread Your Letter of Business Closure

   Proofread and Edit Your Letter Multiple Times - This is essentially a no-brainer. Your letter must be well-written, clear and concise. Therefore, you will obviously need to proofread it multiple times to make sure that it is perfect. The best way to do this is to first type your letter on a word processing computer program, and then look it over very carefully after you have completed your draft. Make sure to check your grammar, spelling, punctuation, organization, and clarity. Read your letter aloud to hear how it sounds. Get others to read it, and ask that they provide you with constructive feedback. Make certain that you do a thorough edit and delete any typographical errors and other costly eyesores. Once you have fixed all of the rough edges in your letter, print off a copy on quality paper, sign it, and mail it out.

9. 
   Use Sample Letters of Business Closure

   Use Business Closure Sample Letters - If you have never written or seen a letter of business closure in the past, you should look for sample copies on the Internet. This will allow you to amend and send it to your contacts according to your specific needs. It is a must that you have several different samples tailored specifically for customers, suppliers, business contacts, and creditors individually. It is not recommended that you amend one generic sample letter for all of your letter recipients as each business relationship varies in scope. Therefore, you must search for letters designed to address each recipient accordingly. Many online services provide free templates with the basic business closure letter structures that can be modified offline. You can download and print them out for your convenience.

10. 
    A Storybook Ending for Your Letter of Business Closure

    Create a Storybook Ending for Your Letter of Business Closure - Your ultimate goal is to end your letter in a positive fashion. Hopefully, you have provided a great service to your customers and suppliers, and that they are truly sad to see you close your business. Your letter should reflect that you are not simply closing one door, but that you are opening another one. Be optimistic about the future, and strongly encourage all of your business contacts to do likewise.

Tips & Warnings

• Always give advanced notice about your business closure.
• Truly show appreciation to your customers and suppliers.
• Clear up all loose ends such as active accounts, pending sales, and payments.
• Express sorrow to your loyal customers for your business closure.
• Be accessible for questions and issues.
• End your letter of business closure on a positive note.
• Do not delay in notifying customers and suppliers about your business closure.
• If there was a problem that resulted in your business closure, do not point the finger blame in your letter.
• Never be unorganized when closing your business.

Resources

• Letter to Creditors That Business is Closing - Great Business

[cygnetbrown]

on 10/7/2009 It's unfortunate that these kind of things are happening so much now. You've written a well organized and complete article again as always.

[jswana]

on 9/24/2009 Your business ethic is strong and is shown in this article How to Construct a Letter of Business Closure. Very good article. Thanks for sharing. jswana 5*

[godfather25]

on 9/22/2009 Very helpful on constructing a letter of business closure.

[midcenturymaven]

on 9/22/2009 I was thinking of just burning everything and moving to Rio de Janeiro, but this article has given me second thoughts.

No, seriously. Almost all businesses have a life span. This is excellent advice for when it comes time to call it quits.

[mymukki]

on 9/21/2009 I loved dissolving my corporation -it was so much fun, I enjoyed sending the letter out to all the PIA clients :-) But then again, it was time to move on -good advice, I can add that you should try to see it as opening a door not closing one!