The question in my mind is can the store be profitable starting tomorrow? If you were to not have all this other crap hanging over your head, could you have money left over off of tomorrows sales after paying payroll, food, rent ect ect. If the answer is no, it’s time to close and cut your losses. If the answer is yes, you need to figure out what caused you to be in this position. Was it your spending habits, living above your means? Was someone stealing money hand over fist from you? If you can turn a profit tomorrow, and you can figure out and rectify whatever it was that put you in this position, you have a chance to get out of this.
To start, go to your distributor and let them know that you will do all of your invoices COD from here on and until you can afford more, you’ll pay them and extra $25 per delivery towards the back invoices. Let them know your situation, and ask them if they can look over your account and help you find some areas that you can save money on. Maybe they can trim their margins on a couple items that could save you some cash. They’ll likely only do this if they believe they are helping your business to survive and catch up on past bills.
Talk to the tax authorities! If you hide your head in the sand you’ll soon find yourself closed. If you keep your current tax liabilities current and keep an open dialog with them, they are unlikely to take action to force you to close. I recommend moving to an employee leasing company to do your payroll as it’ll likely save you a few dollars and you know your payroll taxes are being paid.
Talk to your landlord. See if he may defer a month or two rent to help get back on your feet and allow you to repay this by adding $100 a month extra to your future rent. Also see if he may be open to renegotiating the lease terms to be a little more in your favor. Right now is not the time a commercial landlord wants to see a spot go vacant.
I found myself dug in a hole so far over my head quite a few years back, and I didn’t approach it right for a long time. I stopped answering my cell phone, hiding from the landlord, vendors and taxman. I would find a temporary fix and quickly end up back in the same boat. Finally I realized how many thousands of dollars I was paying in bounced check fees, late fees, tax penalties ect. I sat down with my state tax office and set up a payment plan. They waived all penalties and interest during repayment if I kept my current obligations paid. This allowed me access to my bank accounts which were frozen with their liens. I was able to reduce the stress of juggling debts and bouncing checks left and right and I started putting my energy into growing the business and making it more profitable. Soon enough, all debts are paid, sales have doubled, the business is run much better with higher margins.
Good luck and keep in mind that the bleeding has to stop right now. If you can’t turn a profit tomorrow, just shut down and take care of the obligations you have here as you can. A good quick read to get you motivated would be Dave Ramseys Complete Money Makeover. His ideas will help you climb out of this.