A start up brings with a great amount of excitement and that is how it should be. There are lot of tips and ideas to make your start up work, but it becomes difficult to handle situation in case your start up encounters failure. Commencing a start up feels like having a baby, growth of your start up is as overwhelming as the development of a child. On the other hand, failure of start is as sorrowful as a death in the family. The only difference is that you can rework on or recover the losses in the start up. Here is a tiny guide to ease it out a little.
Symptoms of failure of a start up
For most of the start ups, money is the lifeline. Every entrepreneur, specially the new ones always focus on maintaining the money balance in the business. Hence the most prominent sign of failure is when a business starts running out of money.
An entrepreneur starts feeling discouraged in a situation with less money in business. This situation also indicates unsatisfied employees, customers, and investors which is definitely heartbreaking for an entrepreneur. It is a near death experience for a business owner. Reaching this stage, some businesses succumb, while some make it up to survive. Such businesses become stronger as they now understand how to do more with less resources because constraints spark creativity.
When you’re in a tough phase of business, you realise the real importance of keeping your customers, employees, and investors happy. It is well said what doesn’t kill you, makes you stronger!
What To Do
First, accept! It is very important to accept the harsh truth that your business is at the edge of failure. Not knowing or realising the harsh reality can worsen the situation for you.
Instead of running form the reality, try to figure out the hidden facts even if the picture looks rosy on the outside, so that you have enough time to prepare. In case you find loopholes in your business and see signs of failure, don’t hide it from your investors. That might deprive you of the help and support from your funders in your time of crisis.
Take this as a lesson and use the learning to perform better in business from now on. Build your new and stronger avatar, whether or not your company survives. As Johnson said, “When a man knows he is to be hanged, it concentrates his mind wonderfully.” And this focus will help you become a better entrepreneur.
Your existing investors can be a great help because they have a relationship with you, but be prepared to accept a down round. Help from investors can give you a second lease on life and an opportunity to bounce back. Whereas, there can be a lot of emotional recrimination when you are forced to shut down.
Founders need to be mature and understand that there is no point in playing the blame game. Sometimes it’s wiser to pull the plug rather than to allow the start up to lurch in the crisis. False hope is cruel at times, which makes it better for everyone to cut their losses and make start afresh.