How do I tell my customers I am ending my business?
- KVK Editors
- How to
- Edited 28 February 2023
- 4 min
- Finance, Marketing
When you end your business, it affects your customers. Whether they are incidental consumers, suppliers, or regular buyers, you inform them that you are ending your business. How do you deliver this message? Make an overview, distinguish what you must and what you are allowed to do, determine the right moment, and communicate.
Make an overview of all your customers. And map:
- To what extent a customer is dependent on you.
- Whether you have a framework agreement with any of your customers.
- Whether your customer suffers damage due to your business end.
You take into account your dependency relationship and past with your customer when you tell them that you are ending your business, regardless of what you have put on paper together. Do you have a framework agreement? Or an agreement in which the parties commit themselves to mutually perform services? Follow the agreements (in Dutch) that were made about terminating your collaboration as much as possible.
What kind of relationship you have with your customer makes a difference. A few examples:
- Dependency plays a smaller part for a bakery that sells bread to consumers than for a supplier in the clothing industry, where customers have ordered their fall collection months ago and expect delivery.
- If you deliver to the retail trade and a store has had a new shelf installed just for your products.
The right moment
The moment you know that you are going to end your business, you are no longer allowed to accept new orders - or deposits - that you know you cannot deliver. For example, you have to close your online shop when you know that you can no longer deliver any goods. If you nevertheless accept orders and deposits or payments without delivering, this makes you personally liable. It could even be considered a scam (in Dutch). You do not want to inform your customers too early, nor do you want to leave it too late. When is the right moment? The Supreme Court uses the principle that the sooner you inform your customer, the less damage you cause them. And the less liable for damages you are. On the other hand, you run the risk that your revenues will end sooner than you would like. The situation can arise that 3 months before you actually end your business, you already lose your customers while you still have to pay your staff, rent, and car.
The best time to inform your customer is in line with your normal order and delivery cycle. Do you sell fresh bread to consumers every day and does that complete your transaction? Then you can hang a note at the door 1 day before you stop. If you deliver bread to various restaurants that order from you every few days, 1 day notice is too short. The less inconvenience your customer experiences from your company closure, the better.
Tell a clear story
Tell your customer that you are ending your business and explain practical matters as much as possible. Mention:
- when you stop
- how the last orders will be handled
- whom they can turn to if they have questions
- what happens to stored personal data
- And refer them to another supplier if possible. If your company is taken over, and the acquisition partner pays goodwill for your customer base, you have to do this.
This way you help your customers get back on track, so that they experience fewer consequences of your closure. If you inform - a selection of - your customers early on that you are ending your business, ask them to keep it confidential, as your news is not widely known at this stage.
You are not legally obliged to tell customers why you are ending your business. If you do share this, customers will understand, and you maintain control over your own story. One entrepreneur stops working and throws a party because he has reached retirement age. He invites his customers for a farewell, to look back on all the beautiful years. Another entrepreneur ends their business for financial reasons, health reasons, or because they take a different direction. If you have a warm customer relationship, a personal story about why you are ending your business is appropriate. This can be done in various ways. For example, in a video in which you explain why, thank your busiess relations, and say goodbye. Or by releasing a business press release through the media. See what suits you, your story, your company, and your customers.
Bankruptcy or debt restructuring
A or administrator who settles a bankruptcy or has the task of doing as much as possible for creditors and employees, for example by realising a restart. The chance of this succeeding is greater if an entrepreneur has not yet said goodbye to his customers and the business and customer base are still intact. That is why these rules apply in the event of bankruptcy and debt restructuring:
- You keep your business and customer base as healthy as possible, even if you know that bankruptcy or debt restructuring has been requested.
- There is no obligation to tell your customer about the situation, but you should not accept orders or deposits or enter into contracts that you cannot fulfil.
The curator or administrator ultimately combines - if a restart is successful - the bad news that you ended your business with the good news of your restart. This is how he tries to retain your customers and goodwill. It leaves room for you to tell your customers your personal story.
To-do list and planning
Pick a date on which to communicate publicly that you are going to end your business. Then count back from that deadline and plan your to-do list. On it, you write who to inform, when and how. Also think of current marketing and communication activities. Adjust your message or stop the activities altogether. For example:
- online marketing campaigns
- your website, online shop and domain hosting
- automated emails
- social media accounts
- sponsor activities
Make a backup of your files when you turn off or stop online communication. Or take a screenshot of your website. Your to-do list for ending your business is bigger than just your customer communication. Read all about ending or selling and ending your business in a controlled manner.
This article was partly produced with the help of Erik Jansen, lawyer at Poelmann van den Broek lawyers in Nijmegen.