At least once a quarter I meet with an entrepreneur that is at the end of their ropes and should shutdown their startup. Giving up is hard. During these meetings the entrepreneur is seeking help, chronicling the many different things they’ve tried, talking about when they’ll run out of money, and doing everything but coming out and saying they need to give up. Inevitably, we talk about everything except how to go about shutting down the startup.
Here are some tips when having a conversation with an entrepreneur that it is time to shut down his or her startup:
- Clarify when the startup will run out of money and explain that it is better to shut down sooner and retain some funds to properly unwind the business, pay legal bills, return money to investors, etc
- Reiterate that a business idea failing isn’t the end of the world, even though it might feel like it, and that there will be plenty of additional opportunities
- Make sure and communicate twice as much as you think necessary with employees, customers, investors, and any other constituents as the entrepreneur’s reputation is at stake
- Try to find a home for the product, if you have customers and revenue, by reaching out to competitors or complementary companies
What else? What other tips would you provide to an entrepreneur about to shut down his or her company?