Can you close the loss-making part and keep trading?
Closing one activity is a transition with contracts, people and costs to resolve. Test whether the remaining business can stand alone before treating a partial closure as the solution.
Corporate Recovery Partners
01 / 06
The owner wants to keep only the profitable work
A cleaning company wants to stop its loss-making construction-site service and retain recurring office contracts. Some vehicles, supervisors and employees work across both. The owner expects costs to fall immediately, but the exit involves notice, equipment commitments and unfinished work that need a coordinated plan.
List the customers, jobs and assets within the proposed closure. Identify work already accepted and what must happen to complete or lawfully end it. Obtain advice on contractual obligations rather than treating an unprofitable service as optional.
Check whether the retained operation relies on staff, licences, equipment or premises currently allocated to the closing activity. The boundary must make operational sense.
Record costs of finishing commitments, storing or disposing of equipment and any changes to leases or staffing. Have employment and contract consequences assessed by the appropriate professional. Avoid assuming every cost stops on the chosen date.
Keep uncertain amounts as explicit items for investigation. A partial closure can require cash before savings arrive, and that interval may determine whether the plan is workable.
Build a standalone forecast using its actual customers and realistic overheads. Business.gov.au explains how cash-flow statements track receipts and payments. Include shared costs that the remaining operation must now carry alone.
Check whether the smaller business can fund its own work as well as existing debt commitments. Removing a weak activity does not automatically remove the debts already created.
Agree who handles customer communication, employee consultation, asset decisions and final accounts. If insolvency is a concern, obtain advice about continued trading and the appropriate process before making commitments.
Keep the company identity and obligations clear. Do not transfer valuable work or assets to another entity as an informal workaround. Review the actual cash effect after each transition milestone rather than declaring success at announcement.
