How to Shut Down Your Struggling Startup

In life, people remember how things ended. A couple
may be fuzzy about the details of their courtship, for
instance, but the particulars of a divorce are always
starkly vivid.
As such, if the sun is setting on your startup, it's
important to craft a final impression that leaves
everyone with positive thoughts about you and your
company.
Unfortunately, this is usually happening while the
company is in full-on disaster mode: you're stressed out,
your relationships are fraying and your resolve is
destroyed. Nevertheless, you must take action in order to
end the turbulence with as much poise as possible. You
can't change the past, but you can certainly determine
how you are remembered.
Rip the Band-Aid off. Nothing gets better with time
when you're talking about a failing startup. It's like
pulling a Band-Aid off--the slower you act, the more
painful it feels. Every day that goes by erodes your
finances, your relationships and your sanity. The sooner
you can wind down, the sooner you can go on to focus
on something positive.
If things didn't work out, that's okay. Startups fail all the
time, and there will always be another chance.
Take ownership. The best way to face a failing venture
is to take full ownership of the outcome. No one wants
to hear a story of victimhood or that the problem was
someone else's fault. The more you can take ownership
and humanize the failure, the better reception you'll likely
get.
One technique I've found personally useful--and even
cathartic--is to write a letter to myself explaining, in
detail, why things didn't work out. Once the thoughts
were out of my head and onto the page, I had the
perspective to then reference the letter when talking
about the business to people later on.
Give your team a clear answer. Telling your team that
it's game over is gut-wrenching. But what you want to
avoid is providing a vague, non-specific reason for the
shutdown. Be as clear as possible about what happened,
where things stand and how this will affect them. If they
can't articulate what happened to others, you didn't do a
great job articulating it to them.
If possible, offer people any help that you can. That
might mean opening up your network to help them find a
job, or at least providing a glowing reference.
Related: Closing Shop: Why I Decided to Throw in the
Towel
Thank your customers. Your team and investors may
represent dozens of relationships, but your customers
likely represent hundreds or even thousands--many of
which you didn't even realize you had. These are the
people that will likely support you in the future, so letting
them know how much you appreciate them is key.
If possible, offer a final gift that's as personal as
possible. Maybe you're closing down your restaurant.
Offer to cook the final meal yourself using your favorite
recipe. People will remember the offer--even if they
never take you up on it.
Level with your investors. What you may find surprising
about telling your investors that they lost all of their
money is that they already know. Give your investors
credit; they're smart. Explain to them what you set out to
do, what assumptions failed and why. You don't need to
apologize, you need to explain.
And appreciation for their support is just as important as
a cogent explanation. Investors love to back
entrepreneurs that they know and love, even if things
didn't necessarily go according to plan during a previous
collaboration.
Thank your friends and family. Throughout the journey
of building a business, the excitement and resulting
strain that you've gone through is reflected in all of your
personal relationships.
Not only do those close to you deserve appreciation for
their support, they also deserve to know that you're
okay. They have probably watched your mood change
and are rightfully concerned. They'll want to know that
this is behind you and that it's okay to talk about what
happened.
Reset and reload. Much like a marathon runner needs to
cool down, having to pull the plug on a startup entitles
you to take a break too. If you're too broke to rest, take
a job that requires as little thought as possible to keep
the bills paid while you take the time to clear your head.
And when the dust settles, the best way to put the past
behind you is to focus on the future. Put all of that
nervous energy into building something great and
making use of what you learned.
There is always a next time.