When and how to close a shop

The opinions of the employees of s You are personal.

Usually the to open a business It is accompanied by a great illusion and a portion of emotions that the entrepreneur feels in the prospect of fulfilling a dream and facing a major challenge. Over time, “business becomes your work, your creation,” says Raúl Gutiérrez, founder of Syracuse Consultores, a company that advises companies on marketing and marketing.

When and how to close a shop
When and how to close a shop

It is therefore understandable that an entrepreneur commits himself beyond what is useful for his company, insofar as it takes up most of his time. It can also be understood that the owner of a company is unwilling to leave it to engage in something else, even if that other activity is more productive and profitable.

This holding on may be due to the uncertainty that the entrepreneur creates the perspective of the void that the company he has left will leave. In Gutiérrez’s experience, this uncertainty manifests itself clearly in a common unknown in these cases: “What will I do if I leave my company?”

For the consultant, the answer is “to return to yourself and to know that you are able to develop other aspects (personality and interests) as well as other companies”. In fact, a few years ago Raúl replaced one company in the industrial sector with another in the service sector.

When is it time to close

Throughout the life of a company, there are various situations that can lead an entrepreneur to maintain or close it. Having a complicated sales cycle, being overtaken by the competition, facing a radical change in customer demand or not being able to offer a product or service as the market demands are good reasons to analyze whether it is definitely worth lowering the curtain.

From a legal point of view, the yellow light bulbs, which indicate that a company is headed for a closure situation, are listed in the General Law on Commercial Companies (LGSM). General, If it is no longer possible for financial or market-related reasons to continue operating a company, the closure applies of its business activities or by realigning its management.

This is a legitimate cause, particularly in the case of a financial situation that, by law, implies a loss of two thirds of the share capital. It is also if it is impossible to fulfill the corporate purpose of the company concerned or if the duration of the company stipulated in the company’s articles of association is observed. However, the critical factor in closing or selling a business is when it “tires you out, doesn’t motivate you, and doesn’t inspire you,” said Gutierrez of Syracuse Consultores.

If it is no longer possible for financial or market-related reasons to continue operating a company, the closure / image: Anastasiia Chepinska via Unsplash applies

Distant perspective

There are entrepreneurs who choose to get rid of their business by personal reasons more than financially. This was the case of Raúl Gutiérrez himself. The current advisor owned a timber company for 11 years, the closure of which was not a result of a financial disaster.

Although the prospects for this project were not encouraging, the original business of buying and selling wood and its derivatives remained thanks to the diversification of the offer. In a little over a decade, the Gutiérrez company made various products such as drum doors, designer furniture, broom handles and toilet piston pumps, as well as baskets for flower shops and nurseries.

In the 1990s, after the entry into force of the North American Free Trade Agreement (NAFTA), the Mexican territory was flooded with extremely cheap wood from the United States. One option for Raul was to become a distributor for the Americans, but the quantities they wanted to place outperformed the market he served. Until then, the timber entrepreneur practically lived “for business”. Besides, he hadn’t vacationed in 10 years.

At the time, Gutiérrez, who had a Masters in Science, Economics and Marketing from the American Union, was involved in the development of an association of the micro-industry in southern Mexico. There he started training some of his members. The experience was very satisfying. In addition, as a teacher, he started a new facet to generate additional income and reduce the debt that he had acquired for his master’s degree.

The alternative of getting advice started to concern him. On the other hand, and after vacationing for the first time in a decade – at the last moment with his family – and that he was out of business, he decided to close it. “It is clearer from a distance,” quotes consultant Joan Manuel Serrat. “I realized I had another option,” he adds.

What is the closing process like?

Once the decision is made, the process of closing a business is anything but easy and inexpensive. This includes the levels of resolution and consequently, settlementaccording to LGSM.

The first phase is to cancel the total number of wills for a common purpose that gave rise to the company in question. As soon as the partners decide to liquidate their company, they have to appoint the liquidators to carry out the process. In the sense of the LGSM, these are those who represent the company in order to carry out the dissolution until the company dies, which is the liquidation.

The costs of this process result in part from the need to cover liabilities and other obligations not only towards third parties (authorities, suppliers, customers, employees) as a company, but also between the shareholders themselves and the company. and the shareholders among themselves. In addition, all relationships that the company establishes during its operations must be ended.

The Settlement operations (Payments, collection of claims on the company and, if necessary, the sale of real estate) are the responsibility of the liquidators. When these transactions are completed, they provide shareholders with a final balance showing how much capital the company still had at the end of the liquidation. As soon as these resources are distributed according to the participation of each partner in the company, it is terminated. This occurs when your registration in the public commercial register (for trading companies) or in the public land register (for civil companies) is deleted.

Once the company no longer exists, the liquidators are still responsible for processing any requests from the agency (whether it be a local tax or the Treasury, Infonavit or the IMSS) after the company dies, which is not uncommon. And that is why they are obliged to respond to these requirements and to keep the company’s papers for 10 years. Therefore, the role of the liquidator goes beyond the existence of the company and continues to charge fees for its services in this decade.

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