Startups fail every day. It’s a risk every entrepreneur takes when they start a business. Whether it’s a failed product launch or a hiring misstep, there are ways to come back from these unfortunate events. What matters is what entrepreneurs do after the fact.
How to move forward? Here are 5 steps you’ll need to take.
Talk to an Attorney
All business owners likely have an attorney to turn to for any legal matters. Perhaps they hired one to start the business or ran into some legal problems along the way.
Get in touch with your attorney to learn how to properly close your business. They’ll be able to advise on any business obligations, like employee salaries, payouts for accumulated paid time off, severance packages, and more.
There are specific startup obligations that must follow before closing a business. To prevent accidentally skipping a step, it’s best to consult an attorney.
Make the Announcement
For many entrepreneurs, this may be the most difficult part. Still, keeping employees in the loop of what’s going on is important. Business owners owe it to them, and they’ll appreciate the transparency.
Hold a meeting with your staff to let them know of upcoming changes. Lawyers will advise on when the right time to tell employees is. Letting them know too early isn’t always advised, as it can lead to employees leaving sooner than expected.
In all cases, be honest and ensure you’re allowing enough time for them to look for and transition into a new job. This will help reduce the number of walkouts before closing.
Look for Value Everywhere
Startups have all types of assets, like office furniture, unsold inventory, and intellectual property.
Items like office furniture, computers, and other items can be easy to put a value on and sell on secondhand market sites. This allows entrepreneurs to get some money back for their investment.
It becomes a bit more tricky when it comes to intellectual property. People don’t often put a price tag on their work. Intellectual property can be anything from customer lists to business plans to software. Valuation experts can help determine value if any.
Pay the Bills and Close the Contracts
Make a list of bills that need to get paid or obligations that must be met. This will help be prepared for when it’s time to walk away. Legal disputes, customer agreements, debts, and open contracts should all be handled efficiently.
For example, not terminating contracts can become a liability as some auto-renew. It’s a good idea to look over these items with an attorney to be safe and avoid any issues.
Going through the failure of a startup can be painful and deeply personal for an entrepreneur. With that being said, it doesn’t mean it has to be fatal to their career. Many successful business people have failed in the past. It’s all about how entrepreneurs choose to move forward.
Learning from one’s mistakes is crucial. For instance, a startup failure may have been the result of a bad partnership, the wrong market, a lack of research, or running out of money. Understanding what went wrong will help move on and continue with new endeavors.
Starting a business is no easy feat; unfortunately, failure is a risk all entrepreneurs take.
When your startup has failed, follow the five steps listed above. Learning from past mistakes is all part of the process to success! Those who take responsibility, accept the outcome, and know where they messed up will become stronger in the end.