The Silent Cost of Walking Away from Your Business

Closing down a perfectly good SME that can’t be sold comes with very real financial, emotional, and opportunity costs, even when the business itself is still operating.

Here’s a breakdown of what it typically costs an owner:

1. Direct Financial Costs

• Redundancy & staff payouts – Fair Work requires notice, accrued leave, redundancy entitlements. For even a modest SME with 10 staff, this can run into six figures.

• Lease break or make-good – Commercial leases often require 6–12 months’ notice or a payout, plus “make-good” (returning premises to original condition).

• Supplier/contract terminations – Breaking supply agreements or service contracts can trigger penalties.

• Winding up compliance – Accountants, lawyers, ASIC deregistration, liquidation (if debts exist). Even solvent wind-downs cost $10k–$30k+ in professional fees.

2. Lost Value

• No goodwill monetisation – The brand, reputation, customer relationships, and systems you’ve built have zero transfer value if you just shut the doors.

• Sunk capital – Fit-out, plant, and IP that could have been sold at a discount in a structured exit often become write-offs.

3. Personal Costs

• Emotional toll – Owners often describe it as “watching 20 years of work vanish overnight.”

• Lost retirement capital – Many SMEs are the owner’s largest asset. Closing means they rely only on superannuation or personal savings.

• Reputation risk – Closing can feel like “failure” to staff, suppliers, or community, even if the business was viable.

4. Opportunity Cost

If an owner had prepared for sale 3–5 years earlier, they might have exited with a 2–5× EBITDA multiple. Shutting down instead means losing that equity event entirely.

For example:

• A business making $500k EBITDA could have sold for ~$1.5M–$2.5M.

• If it shuts down, the owner walks away with maybe some plant & equipment liquidation value, but loses the lion’s share.

👉 Bottom line: Closing a profitable SME because it can’t sell is often the most expensive decision an owner will ever make, not because of what they pay, but because of what they lose.