Each of us has responsibility to thread very carefully between relentless pursuit of our venture’s success and being realistic about the venture’s true potential. It takes a great deal of self-restraint to silence the inner optimist, visionary and firm believer in one’s idea. It is not easy to turn our back on the idea, which led us to leave our jobs, exhausted us physically and financially and/or made us borrow money from our families and friends. It is hard to acknowledge that our entrepreneurial dream was just that – a dream.
However, when things haven’t been going well for a while, it is imperative for us to be brutally honest with ourselves. We need to stop day-dreaming before our dream turns into a nightmare. Don’t leave the decision to close the door until the last minute. Leave yourself enough time (and cash) to fail well.
- Don’t go beyond your personal minimum: Leave yourself enough time and money to keep you (and your family) afloat for long enough to find a new job and source of income. Leave yourself at least three-months-worth of cash to pay your bills.
- Treat your employees fairly: Give employees heads up so that they have enough time to find new jobs. Pay them. Pay their insurance. For extra points, help them find new jobs. If you treat your employees well, they are more likely to come work for you in future.
- Don’t jeopardize other businesses. Recognize that other businesses (and their owners and their employees) might be dependent on your venture’s existence. Treat them as you wish they treated you if they faced the same issue. Pay your suppliers. Deliver to your customers. Maintaining your credibility and reputation in the industry will be key for your next career move.
- Part with your investors well: If you borrowed money from non-financially-savvy friends and family, consider paying them back from your future earnings. The professional investors knew what the odds were when they decided to fund your venture. They took the risk that your company might not be the one (of the 10) that succeeds. They are used to failure. They will likely understand. Explain your actions. Share your learnings. Give them enough time to digest it and react. If you treat them well, they are more likely to invest in your next venture.
- Be positive: Frame your story as a valuable – perhaps even life-changing – personal and professional experience. You surely learned a great deal by launching, building and closing your business. Deliver a happy ending – one that you could be proud of. Mindset matters.
I’m aware that this is easier said than done. However, treating our families, employees and business partners well is not only ethical. It is also a smart thing to do. If we treat them fairly, they are more likely to support our future business endeavors. So let’s not burn the bridges. Let’s leave ourselves enough time to fail well. Let’s fail early.