Failure Isn’t Death: What to Do If Your Startup Fails

by | Apr 6, 2015 | Financial Services

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It’s been reported that 8 out of 10 businesses fail within the first 18 months. That’s 80 percent. Failure is so common that in some circles it has become a badge of honor, not a mark of shame. Painful, difficult, and challenging, yes. But is it the end of the world? No.

You’re Not Alone
When your business fails, recognize that you are in very, very good company. Steve Jobs, Richard Branson, Walt Disney, Bill Gates. All have had business failures. Put your emotions aside and get to work maximizing what you can while winding your business down.

Assess Your Assets
Just about every failing business has some assets of value. You may have property, intellectual or physical, office equipment, or customers. Maybe you’ve got a valuable commercial lease, or company vehicles. Tally up what they’re worth and put together a plan to sell them.

Assess Acquisition Options
See who might be out there for whom your business is a viable acquisition target. Have a few conversations, but beware of getting too attached to the idea if it doesn’t seem your pitch is generating any interest.

Deal Honestly With Investors
Your investors know there are risks in business. Unless this is their first time investing, they have likely experienced failures before. Deal with your investors professionally and up front. Hopefully you chose your investors because you felt they were a good fit with you and your business, which means it is a relationship that may last beyond your current venture. Keep that in mind as you deliver the bad news to your financial backers.  You may be surprised to find out that many of these investors might still back you on your next venture.

Help Employees Move On
Do what you can to help employees move on to other opportunities. Talk to them about what they might like to do next, and when you can, introduce them to others you know who may be hiring.

Let Your Customers and Public Know
Whether you publish a blog, send individual letters, or send out a formal press release, it’s important to let your customers know what to expect. Will someone else take over where you’ve left off? Do they have a certain number of days or weeks before you pull the plug? Being clear and transparent will help you retain credibility. This is important, because the next thing you’re going to do is get out there and start your next business.

Ready to get back in the saddle?  Using the JOBS Act and new Rule 506(c), you can publicly solicit accredited investors for your next business if you take certain steps to verify them.  Find out more at

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