How do you shut down your startup?

According to Harvard Business School, 30% to 40% of business startups fail. That means the company liquidates all of its assets and the investors lost much or all of their investment. If you measure failure by whether the company reached its projected return on investment, as many as 80% of startups fail. And that’s in normal times.

These are not normal times. If your startup is in trouble, you’re not alone. Keep in mind that failure and reinvention may be a necessary step on a long path toward success, but we don’t always have a clear path for getting from our current failure to our future success.

It’s also hard to find good advice on how to wind down a company. That’s a problem if your company has already reached a point where you are stretched to afford a lawyer.

Here are just some of the activities you may need to undertake to wind down your business:

  • Notify your investors
  • Pay outstanding debts and taxes
  • Terminate your employees and figure out their severance pay
  • Dissolve the company with the secretary of state’s office
  • Cancel company credit accounts
  • Cancel company social media and email accounts
  • Value your assets, including everything from intellectual property to customer goodwill
  • Find out if you can sell your company’s assets

Should you file for bankruptcy?

It’s an important question. Is your company really ready to shut down? Or is it only the current troubles that are keeping you from being successful? Is there any difference?

There can be. Under the right circumstances, you may want to file for Chapter 11 bankruptcy to reorganize and shed many types of debt.

If your business is in trouble, it may seem like a bad time to hire an attorney. In reality, a good business lawyer may be able to save your business for the long term, or at least minimize your losses and wind your business down thoughtfully so you’ll be ready to get started on your next project.