Have you ever wondered what the process is like to wind up a business?
And what are the stages that you must go through when you face liquidation?
Just the mere mention of liquidation can send shudders up a Business Owner’s spine… But it doesn’t have to be the worst thing that ever happened. Sometimes it is a very positive thing and can mark the opportunity for a whole new beginning.
It’s imperative to know that it’s often not the fault of the Business Owner or the Management Team. Changing economic circumstances, external forces like Covid lockdowns or non-payment from major clients, bigger industry players entering the market, and a whole variety of factors that you can’t plan for can force you to change your business model and make your current business no longer viable to operate.
This happened recently to our client John Debrincat, and it’s an honour to bring his very personal Case Study to you. John’s former business, eCorner, was a 19 year old IT business with once a very thriving e-commerce business with a strong Australian, New Zealand and global presence. During the Covid lockdowns, as well as other extenuating circumstances, they experienced many of the issues mentioned above, and the Directors saw that they had three options as the business was entering a different business model life cycle.
- Remain trading and look at other options to generate income including changing the business model to suit the changing business environment.
- Look for an outside organisation to either buy or invest in the business.
- Voluntary liquidation – to wrap up the business so that all parties could be paid out while there were still substantial funds available, and they were able to control much of the process.
In April 2021, John and his partners made the confronting and difficult decision to go into voluntary liquidation, and that is when they initiated working with O’Brien Palmer to begin the liquidation process.
Personally, I highly commend John and the other partners on the leadership and courage they displayed to make this decision when they did, as timing always impacts the outcome and the process once it begins.
John has very generously come and sat down with us for an in-depth interview to discuss the entire process, documenting each stage from a business point of view, but also speaking on a personal level around what it meant for their team, their investors, and shareholders – many of whom were personal friends and family, their suppliers and their very valued customers.
He shares how they had those difficult conversations, how they were able to access the Government Fair Entitlement Guarantee to ensure that all staff were paid out all their entitlements, and how they were able to support their customers in the transition over to other providers, during a time that was also very stressful to them personally.
By telling his story and sharing his knowledge, John can hopefully help other business owners facing a similar situation, alleviate some of the stress that may face and gain some clarity around what happens, both personally and professionally.
John has also created a document which I greatly encourage you to go to our website and download after watching the video. It’s called Closing Down: Voluntary Liquidation – Impacts and Decisions. And it’s very helpful and powerful information as you usually don’t get to hear firsthand about what it’s really like to close your business down through the formal liquidation process.
Lastly, I cannot stress enough that businesses fail for many reasons, and it doesn’t mean anything about you as an individual. I think we can learn a lot from John who has come through this journey and has come to a much happier place within himself by recognising that their business cycle had drawn to a close and moving on to do other viable work with a not-for-profit organisation, as well as consulting back to many of their former clients.
We can all be inspired and learn many lessons from John I believe, after hearing of his experiences, his leadership, and his commitment to doing the right thing by everybody involved. Over the lifetime of his business, over 5,000 small e-businesses start their journey with eCorner, and many of them have grown into very successful businesses! John takes a lot of satisfaction that his company was part of that journey and the legacy lives on through them.
Please, if you find yourself in a similar situation that your business is no longer trading viably due to any of the reasons that might be affecting you, please get in touch with either myself or my team for a no fee/no obligation consultation, and we can have a confidential discussion to discuss your options.
And, if you feel that has been helpful to you or may assist a colleague, we would greatly love you to share this with them or refer a business owner, so they do not need to face these pressures alone.
Managing Partner, O’Brien Palmer