Things don’t always go according to the plan in the world of business and apart from hoping for the best you also need to be prepared to deal with the worst. No one enjoys failing, but doing it right can avoid future problems and enable you to move on. As you start your next venture, you need to have the confidence to look forward and breakthrough the psychological barriers caused by failure. The decision you make while unwinding your business is very important because if it is done poorly it can have dire consequences in terms of your credit rating and affect your position in the market.
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Firstly a full disclosure to all those who are directly connected with the business is necessary. Investors, creditors, board members and employees should all be kept in the loop. This allows transparency, facilitates discussions on how to implement the best course of action and though your product or service didn’t work out, they will help you to unwind appropriately. After the disclosure, it is also important to get a consensus so that everyone knows what is happening and will not complain or protest later. Appointing a lawyer would be useful to get the procedures and other formalities right. You can also discuss the situation with the co-founders of your business as they can provide valuable insights.
Ensure that a comprehensive public relations (PR) strategy has been formulated before the unwinding. The news should not reach the press too soon as it could lead to conflicts within the management. It always helps if you have an approval from the board members on the PR strategy. Ensure that you are also equipped to notice the conflicts of interest if any and deal with them.
It is most likely that investors have dealt with these kinds of situations before. Keep your approach and viewpoint consistent during the process of winding up. This will enable them to trust you and consider working with you in the future again.
No discussion on the closure of a startup is complete without considering its financial implications. Firstly try to avoid any potential deal or financing that may tempt you to believe that things can be turned around. These opportunities may only help you fix things on a temporary basis and turn your focus away from the reality.
Officers and directors of a company are usually not liable for its debt. However, there are certain exceptions and it is crucial to be aware of them. One of the major exceptions is payroll and withholding taxes. You must ensure that all debts are cleared with respect to payroll taxes and amounts withheld from employees’ wages. If not, the governing bodies will pursue this liability aggressively and you may have to face the judicial consequences.
Instead of spending all your resources on a startup that is bound to fail, try to get the current expenses to naught as soon as possible. This will enable you to save some cash which can be utilized to pay off the company’s debts. Remember, requesting your investors for more financial accommodation is the most difficult after you have announced the closure of the startup. Also identify the business assets and try to get a fair market value for them.
Plan strategically to get the most out of a failed situation. Consider every option for the sale of the business so that you may even return the money to the stakeholders. Lastly, preserve all the financial records of the failed startup. This will help you to draw on your previous experience and be of immense use when you are contemplating a business opportunity or planning to start a new venture.
| Rank | Web Host | Price | Review | Rating | Visit Host |
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| 1 | | $3.95 | Read Our Review | | |
| 2 | | $1.99 | Read Our Review | | |
| 3 | | $3.15 | Read Our Review | | |