How to tell your employees you're going out of business

How To Tell Your Employees You Are Going Out of Business

In January we closed the doors to Chocoley – my chocolate company of 15 years. The process was one of the most challenging learning experiences of my life, but I made it to the other side okay, a new, stronger person with a whole new perspective. As I watch what is happening right now with coronavirus and the economy, I realize that a lot of small business owners will suddenly be forced to make the same challenging decision we were forced to make. My heart is telling me that sharing my own experience in a series of posts may make navigating the process a little bit easier for others. While these posts may be challenging to write, if they help ease the burden on just one business owner, it feels worth it to share my experience on this platform.

Telling our employees we were going out of business was one of the hardest things I’ve ever had to do in my life. Our small team was a small family, they loved each other and their jobs, and I knew the news would be devastating to them.

One of the most challenging parts was navigating WHEN in the process to tell them. We were trying to explore every possible option to save the business (including seeking an emergency buyer who could keep the business alive). We needed a staff to get through helping us shut down if it came to that, and we knew a potential buyer would need a staff if we could find one, but at the same time we didn’t want anyone to be in a worse situation because we waited to tell them.

In the end we decided it was best to tell them as soon as we knew how bad things really were and allow them to decide how to move forward for themsevles. Their well-being was our top priority. We were actually NOT yet sure we were definitely closing or what the future held when we told everyone the situation we were in with honesty and transparency.  I am not going to say that we handled it perfectly, but I can say that in hindsight I’m extremely glad that we handled it in the way we did.

Give Your Employees As Much Notice As You Can – Even if the Timing Feels Horrible, or You’re Scared You Can’t Finish Without Them If They Leave Before You’re Closed.

As soon as we realized that there was a possibility we may close, we let our employees in on the situation so they could take the next steps that were in their own best interest. For us, this was just before Christmas, making the timing feel cruel. But we could not control the situation, and didn’t want the fear of ruining their Christmas get in the way of allowing them to be in the best possible position for their future.

We brought each one into a private meeting to let them know that the business was struggling. We shared that we were looking for an emergency buyer and exploring every option, but that even if we found one we had no idea if they would keep the business in the same location.

We told them that right now they had jobs, but recommended that they start updating their resumes and considering applying for new positions at the appropriate time. We knew who it was most key to have with us until the end with what would have to get done (because closing is not flipping off the light switch) and communicated with those people that we would REALLY like them to stay until the end. We were transparent with each person about how long we thought we would be able to afford to continue to keep them on staff and pay them in the current situation.

The hardest of these conversations was with an employee who was out sick with the flu at the timing things were all coming to a head. Having to tell a really amazing employee who was stuck at home with a high fever that she may not have a job was one of the most painful things I have ever done. But we also knew it was the right thing to do because she could update her resume and start looking at job listings while she was home sick. We also didn’t want her to hear it from anyone other than us.

Make Sure Your Employees Know THEY Are Not Responsible For The Business’ Failure

It was extremely important to us that our employees know that they had done a great job at their own roles, and that NOTHING that was happening was their fault. We communicated this clearly to each person as we broke the news that we may not be able to stay open. We made sure to tell them specific areas they had personally excelled, and truly helped the business.

At the end of the day, responsibility for your business’ health lies with you. There may be a lot of factors that led where you are, but now is not the time to lay blame on anyone who works for you. Make sure they know there was nothing they could have done that would have changed things.

Offer Support & Help Finding New Employment

Yes, you will have a LOT on your plate in closing your business, but your people will also need you through this process. Make sure they know immediately that you will support them.

When we told our people the situation, we made sure that every employee knew that we would write letters of recommendation for them, and do whatever we could to support them in finding new jobs.

For the ones I knew may not ask on their own when they needed them, I wrote up letters and gave them to them as quickly as I could. I poured my heart into each letter and made sure that they were as honest and helpful as possible to a new prospective employer to help them find the right new position.

I also made sure to keep an eye out for positions that they may be a good fit for myself, and ask around to see if anyone needed someone for a role they would excel at.

And finally, I made sure they each knew their own value and strengths. I wanted this to be an opportunity for each of them to move up on their career path, and tried to help guide them to seeing their potential in the job market.

Allow Your Employees The Flexibility to Take Job Interviews While They Still Work for You

We also made clear to our employees (who were all on salary) that if they got a phone call about a job while they were at work, or were offered a job interview they should take it, even if it was during what would normally be their work hours for us. And the time away from the office for those interviews would not come out of their paycheck.

Show Your Employees Gratitude for Sticking It Out With You

Some of your employees may leave very quickly when they get the news, and others will stick it out. This time will be highly stressful for everyone involved. You’re losing your business, and they are losing their jobs. Make sure your stress through the situation doesn’t increase their own stress.

Be aware of saying thank you, and making sure they know you appreciate that they are still there helping you shut down.

Make It Clear You Will Absolutely Be Paying Them For Any Time They Do Work For You – And Absolutely Make Sure You Do!

Make sure they know that no matter what, while they still work for you they will be paid for their work, even in the current situation. If you will not be able to pay your employees for the time that they continue to put in, do NOT keep them on your staff.  You’ll need to find a way to handle what they would have done yourself. They deserve to be able to use that time to find a new job. It’s bad enough to lose your job, but do not ever put someone in the position where they are working for you and not getting paid.

Closing Thoughts and How It Played Out For Us:

I am really happy we handled things the way we did. With honesty and transparency, we did not have to actually lay anyone off or tell them they had to leave before they were ready.

One of our employees chose to leave almost immediately to spend all of his time looking for a new position. That was what he felt was best for him and where he was in his life.

The others all stayed with us while they started updating their resumes applying for jobs. Each left, one by one, when it was right for them or they had found new positions that were the right fit for them.  Our manager (who we had asked to stay until the end if she could) stayed until almost the very end and specifically told people she was interviewing with she couldn’t leave us hanging.

One of our other key people didn’t end up liking his new job and decided he was going to move to another state for a different opportunity instead. He came back and helped with breaking things down for a couple of weeks after our manager started her new gig before he left town. It all worked out a well as it could have, given the situation.

At the very very end my dad and I were in it ‘alone’ breaking things down to get out of our space, but it was nothing we couldn’t handle. And I was happy to do it, knowing our employees were all going to be okay.

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How to tell employees you're going out of business

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