Well, it finally comes down to it. You poured your time, money, heart, and soul into your start-up business, but despite your best efforts, your little company just isn’t going to make it. Maybe the consumer just wasn’t ready for your innovative new ideas. Maybe the market took a downward turn at precisely the wrong moment. Whatever the reasons, once you begin to see all of the major signs of impending failure, there’s probably no way out of it. All you can do is try and salvage the situation as best you can. Here are five tips on how to keep your head above water when your business is sunk.
1. Remember Your Team
Once closing becomes inevitable, it can be tempting to try and keep everything hush-hush from your employees. However, now is not the time to be secretive. These people look to you for leadership, and your responsibility to them is all the more important now that everything is going south. Be honest with them, and let them know exactly what is going on. Offer your support, and appeal to them for support as well. If you treat your employees correctly, then they’ll be more likely to stick around and help make the transition go more smoothly. If, on the other hand, you try to hide the truth or mislead your employees, then once it becomes obvious what is really going on (and it will become obvious sooner than later), they’ll abandon your company like rats from a sinking ship. Perhaps worse than that, you’ll earn a bad reputation among prospective workers, and once you gather the resources for a new venture, you’ll find that reputation is reducing the quantity\quantity of prospective candidates. Instead, encourage your employees to make the best of a bad situation. Help them learn skills and complete projects that will make them more valuable to future employers. Maybe most important of all, be aware and sensitive of your employees’ emotions. Encourage discussion, and be there for anyone who may need to come and talk with you.
2. Remember Your Investors
Unless you managed to build your start-up without any kind of outside assistance, you have a responsibility to the people who helped you get your start-up off of the ground. Go to them for support and advice, and let them know what options they have. You may be tempted to put this step off until the last possible moment, because you’re afraid of having to face these people down and tell them that they lost money on you, but if you do, you’ll be much less likely to be able to gather necessary funding for possible future projects. However, if you’re open and transparent with your investors, they’ll see that although the venture itself may not have paid off, at least you are doing everything in your power to protect their interests. Keep them in loop, and respect their input.
3. Remember Your Customers
Going out of business does not mean that you can simply disregard your contractual obligations to your customers. Be sure to either fulfill any current customer orders or to refund customers for incomplete orders. Filing for bankruptcy may absolve some of these debts, but even if a court rules that you aren’t responsible to refund a customer who has paid for a service, the customer himself will probably still hold a grudge and may even attempt to go after you in court.
4. Remember Your Legal Responsibilities
Speaking of court, there are a number of legal steps that need to be taken before you can close your doors for good. A complete checklist can be found at U.S Small Business Administration website, but a few of the key points include canceling your permits and licenses and taking care of any tax-related issues. Additionally, you’ll want to collect any outstanding accounts payable from your customers, close any business-related bank accounts, liquidate your company assets, and dissolve your corporation or LLC.
5. Remember to Keep Your Chin Up
Hey, part of being an entrepreneur is about accepting the risk. Only about 1/3 of all businesses ever make it to the 10-year mark, so at least you’re in good company. There are laws and institutions in place to help protect your personal assets, and once the dust clears from the end of this particular venture, you’ll be able to pick yourself up, brush yourself off, and move on to another exciting idea. So, stay positive, and remember: your next big idea might just be the one that finally pays off.
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