What it feels like when your business fails and how to start rebuilding

Earlier in the year, I had to shut my business. Seven years of work, success and challenges came to a grinding halt.

Lots of businesses fail, but we don’t talk about it very often. I wanted to share my experience in an effort to help people in similar situations.

This blog post provides advice on the emotional aspects of failure. It also signposts advice for people who are struggling.

Why do businesses fail?

Companies need cash flow to survive, so the timing of investment decisions, lost customers and bad debts are common causes behind business failures.

You reach the point where you do not have enough money to meet your obligations and need to take action.

When a mature company fails, it tends to be caused by a combination of factors. Investments reduce your cash reserves and then something unexpected happens, for example.

That was my experience; a mix of timing, bad decisions and external factors that were out of my control.

The impact on your staff

Redundancies are the first, and often hardest thing, that happens when businesses get into trouble.

It’s incredibly tough to tell people that have supported you that they won’t have jobs anymore.

You need to follow the legal process. There’s an opportunity to support your team by helping them find work, giving references and being thoughtful about how you communicate.

You also have to remember that your effort created jobs and opportunities for people over a number of years. If you’re struggling, that perspective can help.

Understanding the personal implications

Most businesses in the UK are incorporated as private limited companies, which can give you some protection if things go wrong.

However, every situation is different, so it’s important to get professional advice.

The feeling of uncertainty, that things were out of my control, was one of the hardest things to deal with when my business began to struggle.

Getting help and making a plan on how to save or close your company will relieve that pressure – don’t bury your head in the sand!

Your accountant will be able to help. You can also reach out to one of Enterprise Nation’s advisers.

It’s worth talking to other business owners too, if there are people you feel comfortable sharing your experience with. They can provide a useful perspective and may have ideas on how to turn the situation around.

Managing your finances

Regardless of why your business stopped trading, it’s likely to have an impact on your personal finances.

You’ve lost a source of income. You might have signed personal guarantees or had to reduce your pay.

Creating a personal budget will help you take steps towards fixing the situation.

Here are some organisations that can help if you’re in financial difficulty:

• National Debtline: Offers “free, impartial debt advice and support” through a phone line, online chat and advice-led content.

• Citizens Advice: Provides “practical advice you can really trust” and signposts support on its Debt and money page.

Supporting your clients and customers

I had a list of clients to call when my business closed. They supported my journey, in some cases since we launched, and it was an intimidating task.

I thought they were going to be annoyed, angry even. That I’d let them down.

In the end, they were incredibly supportive. They sent kind messages and continued to work with me and other team members in different ways.

People understand that these things happen. If you’ve helped people and tried to have a positive impact, chances are they will return that in kind.

Reframing your identity

I was proud to tell people that I ran a business and it made up an important part of my identity.

Even now, six months after it closed, it feels strange not to talk about it when I introduce myself.

Losing that part of your identity can be difficult. The more central or all encompassing a role your business plays in your life, the tougher it’s going to be.

The thing to remember is that you are still the same person, with the same amazing talents. You were able to build something and can do it again.

Mental health

Tough trading periods can impact your mental health and closing my business caused me a significant amount of anxiety.

You can’t do this without looking after yourself. Get help, develop a plan and make sure you take care of your physical and mental health.

We recently wrote about how to get your inspiration back. That blog post shares lots of practical resources if you're looking for more support.

Grieving your loss

We invest a lot in the businesses we run, so it’s hardly a surprise that closing a company has a big impact on people.

It takes time to recover. The process is a type of grieving, with various stages of anger, denial etc. before you fully accept what’s happened.

It gets easier with time. Make sure you have a plan to deal with the practical elements of what’s happening and think about what you can do to rebuild.

Additional resources

• Find an Enterprise Nation Adviser that can help you

• A better way to turn around a struggling business (Enterprise Nation blog)

• Lost your business mojo? Here are nine ways to get your inspiration back (Enterprise Nation blog)

• Small business, big pressure: talking about mental health (Enterprise Nation blog)