This article separates a historical snapshot of Russia in late 2025 and early 2026 from general principles for making a business decision. That snapshot covered businesses ceasing operations, selling remaining stock, winding down teams and trying to keep going until spring. When deciding for your own company, compare these examples with its financial figures and current conditions.
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The Russian example: a historical digest for January 2026
1) In Russia, 107,500 companies ceased operating on all grounds in the first half of 2024. According to Interfax, citing Federal Tax Service figures (in Russian), most of them—89,800—were removed from the Unified State Register of Legal Entities by the tax authority. A change in the register does not necessarily mean that an operating business closed because it was making a loss.
2) According to Fedresurs's statistical release for the first quarter of 2025 (in Russian), 1,629 bankruptcy liquidation proceedings were opened in Russia, 22.1% fewer than a year earlier. The number of creditors' notices of an intention to initiate bankruptcy also fell. These historical figures describe a particular period; they do not show that an individual company has no debt problems.
3) According to the registration section of the Federal Tax Service's 2024 annual report (in Russian), Russia had around 4.5 million individual entrepreneurs. This historical figure provides context: reports of businesses ceasing operations need to be compared with the number of existing and new entrepreneurs.
What factors can contribute to more business closures?
Consider the main factors:
- Taxes and tax regimes: Russia's standard VAT rate became 22% on 1 January 2026. This is a Russian example of changing conditions; check the tax regime that applies to your own company.
- Expensive borrowing: in the historical Russian snapshot, the key interest rate was 16% on 30 December 2025, and the next scheduled meeting at that time was 13 February 2026. This is not the current rate. Assess loan terms and supplier instalment plans using the actual contract.
- A cash flow gap: customers take longer to approve work, suppliers more often ask for advance payment, and businesses more often pay upfront. In project work, this can quickly create cash flow gaps.
There is no need to panic or interpret everything as confirmation of your own fears. Many businesses close, but that does not mean none can survive.
Why do entrepreneurs close their businesses?
The reasons in 2026 often look ordinary: the company does not have enough cash for current payments, even though it feels busy. This is a classic cash flow gap: obligations fall due before money comes in. The 101 blog explains why cash flow gaps arise and how to deal with them systematically: how to avoid a cash flow gap in a construction company.
A second reason is that revenue starts to decline unnoticed. First there are fewer new contracts, then payments shift to later dates, and then the average sale falls. The owner keeps up the pace, pays salaries and rent, and eventually realises that personal funds are financing the business. The pattern of falling revenue is explained in why business revenue falls and what to do about it (in Russian).
A third reason is that prices no longer cover the burden on the business. In the Russian example, a new standard VAT rate and amended simplified taxation rules applied from the beginning of 2026. Their impact depends on the business's income, selected rates and transactions. A pricing error can turn an apparently normal year into one spent working for turnover alone. To identify where pricing breaks down during a crisis, see pricing methods for project businesses during a crisis (in Russian).
A hypothetical example from a project business: a crew takes on several jobs with payment after completion, materials are bought in the first weeks, and the customer pays after a stage is completed. Money from different projects is mixed together in the accounts, and the manager sees an overall surplus. Then one project makes a loss, which is covered with another project's money. A couple of months later, the real picture emerges: one project has consumed the contribution margin of two others, and there is no cash left. To identify the critical issue, check pricing, the contract, accounting and how the team works; this example does not establish how often entrepreneurs close their businesses.
Without separate project accounts and a comparison of planned and actual cash flows, a decision to close becomes emotional. Figures reveal options: cut a business line, change contracts, rebuild pricing or pause growth.
Figures to check before deciding to close a business
The decision to close or keep going has an uncomfortable feature: it is often postponed until few options remain. It helps to create a dashboard of 7–10 metrics to review weekly and monthly. For a ready-made list, start with business performance indicators every entrepreneur should analyse.
The indicators below can serve as warning signals for construction, services and small manufacturing businesses. Watch their trends and document how each is calculated. Today's profit in your head can easily disappear after expenses are reconciled.
| Indicator | How to assess it | What it means for the company |
|---|---|---|
| Cash runway | How many weeks the business can keep going if receipts stop while mandatory payments remain | If the runway is shorter than the sales cycle, the business becomes dependent on new advances and loans |
| Contribution margin by product or project | Revenue minus variable costs | When contribution margin is positive, greater volume may help cover fixed costs. When it is negative, every additional sale increases the loss |
| Fixed costs | Rent, office costs, management and services; account for loan interest according to the model you use. Include repayment of loan principal separately in the cash plan | A high fixed-cost threshold makes a revenue decline critical |
| Cash flow gap | Payment and receipt dates; planned versus actual cash flows | Frequent gaps mean that payment and purchasing arrangements are damaging the business |
| Receivables by age | How much customers owe and how long it has been outstanding | Growing overdue balances increase the risk of work stopping and contractual disputes |
| Working capital | Current assets minus current liabilities | When working capital is insufficient, the business relies on advances and shifting money between obligations |
A basic financial structure is needed to keep these indicators from becoming a painful manual exercise. In a project business, three reports are useful: a cash flow statement, an income statement and a balance sheet. See the three main reports for a business owner (in Russian) and the separate guide to a company's working capital.
Changing tax conditions add another layer of risk. In the Russian example, the standard VAT rate became 22% on 1 January 2026 and simplified taxation rules changed. If a business reaches a limit or has to switch to VAT, the economics of a transaction can change at once. Keep these Russian-language guides handy: VAT in 2026: the 22% rate and what businesses can do (in Russian), the 2026 Russian tax reform (in Russian) and changes to Russia's simplified taxation system in 2026 (in Russian).
When accounts are scattered across spreadsheets, closure decisions often come too late: the figures arrive after the event. The 101 App makes it easier to record events by project and see receipts, expenses, obligations and margin analytics. This helps reveal the cause of problems sooner; accounting alone does not guarantee that a business will be saved.
For deeper analysis, it helps to automate reports on project profitability, expense structure and the company fund. On the PRO+ plan in the 101 App, reports are generated automatically from recorded events and show analytics on expenses, profit, margins and the company fund.
The key question is straightforward: can the model generate money over the next 3–6 months under the current tax rules, prices and demand? If the figures do not provide an answer, establish the accounts first and then make the decision.
How to decide: close, pause or relaunch?
A crisis does not mean a company must close immediately. There are several possible scenarios: legally close it, pause operations while retaining the business base, or relaunch the model with new prices and contracts. To choose, work through a short sequence of calculations:
- Build a cash plan for 6 weeks, covering mandatory payments, expected receipts and dates. If this is your first plan, start with the guide to cash flow gaps.
- Break down profit by business line or project: where is there contribution margin, and where is it absent? For a basic calculation, see how to calculate business profitability.
- Recalculate fixed costs and the break-even point. For guidance, see how fixed and variable costs affect a business (in Russian).
- Check contracts and staged payments: advances, stage completion, deadlines for signing acceptance documents and responsibility for late payment. Contract discipline is often cheaper than borrowing.
- Account for the tax scenario that applies. The Russian example in 2026 is 22% VAT and updated rules for special tax regimes. In complex cases, start with how microbusinesses can navigate Russia's 2026 tax reform (in Russian) and establish which regime applies to your company.
- Choose between closing, pausing and relaunching. The criterion is how much money and time it takes to reach a sustainable surplus, and whether those resources are available.
If the calculations show that one business line creates the loss, it may be too early to close the entire company. A management accounting audit can help: what counts as revenue, where hidden costs sit and how reporting works. Start with a management accounting audit and hidden business expenses (in Russian).
If the calculations show no money for a relaunch while debt grows faster than revenue, closing can become a way to stop losses. Avoid turning closure into chaos: settle obligations to employees and contractors, finish documentation for work already completed and wind down customer contracts. The legal process depends on the business's legal form and debt situation; complex cases require a lawyer and an accountant.
A closure decision may be made when there is no cash left and obligations are already due. Looking 6–12 weeks ahead of a critical point may leave time to assess a relaunch scenario. Its feasibility depends on cash, debt and demand.
Which businesses may survive in 2026?
Accounting discipline and the ability to reconsider decisions may improve resilience. In the Russian example from early 2026, raising standard VAT to 22% required prices and documents to be checked, while the 16% key rate at the end of December 2025 reflected tight monetary conditions at that time. These figures do not describe every country and do not replace a check of current conditions.
These are characteristics of companies that may be more resilient; organisation and financial discipline matter:
- Prices and contracts have been recalculated for 2026. For the Russian tax context, see the 2026 tax reform (in Russian) and the 2026 VAT digest (in Russian).
- Project management is connected to cash management, so obligations and purchases are visible in advance. For example, the company uses project management tools (in Russian) and a business analytics system (in Russian).
- Fixed costs remain at a level that can withstand a revenue decline without panic.
- The team and contractors follow rules on advances, reporting, deadlines and supporting evidence for expenses.
If you work in construction, renovation or project services, see the 2026 crisis: a contractor's plan (in Russian). It explains how turbulence affects demand, contracts and cash, and which actions can create a buffer.
A final thought on entrepreneurs closing businesses: companies may become more resilient by accounting for applicable taxes, borrowing costs and customer expectations, and connecting accounts, contracts and pricing into one system. There is no guarantee of survival. These actions provide a basis for assessing options. Closing a business can then become one of several manageable choices.
