If your business venture fails, how would you cope? It depends of course on details and circumstance, but how do you see yourself handling it?
Many small businesses and new ventures fail, and often quite soon after first opening their doors, so to speak. The high likelihood of this happening makes it pertinent to think about how you might cope with a loss. It's not what anyone wants to consider when planning their venture, or when you're actually doing it and running your own business. But the stats are not in your favour; you may have to try your hand at being a business owner a couple of times before it sticks. American Express report "Shop Small" showed that SMEs run a large risk of folding within five years of setting up shop.
It's not just you
If you have staff it's definitely something you want to consider seriously. A failing business is a real blow to you, but if others have invested their time and money you owe them something in return. Or do you? Maybe you feel that this is all self-evident, and when you sign up for a job anywhere you do so with the implicit knowledge that it might not work out. But even if that's your view, it seems that some basic decency is still required. At the very least you owe them some honesty.
Dealing with your customers
When Australian company My Baby Warehouse got in over their heads recently they quickly closed down all their social media accounts. Their Twitter and Facebook were abruptly silenced before they customers had a chance to comment, or even just to ask questions. Possibly this decision was made to put a halt to the already mounting pile of bad press about the company and its owners, Arora Group, but it could have been handled much better.
Some of the worst PR-disasters to ever hit any company anywhere have been successfully negated by the firm going out in front and facing their customers. Not just to apologise but to discuss, and to the extent possible, make amends. More than one study shows that customers care more about the response than the original issue. Consider the many examples of cars being recalled due to faults in the last five years or so, from minor issues to more severe ones. This doesn't seem to do much in the way of decreasing sales. Perhaps that's because in Australia the car companies have pre-empted any serious injuries, but it's also likely that consumers feel that there are enough government and consumer bodies watching out for their interests that they can relax. They are appeased by the effort and their trust in the company is strengthened rather than irreparably damaged.
How does the little guy cope?
So how do you handle bad press when you're an SME? Large companies have the finance to fix issues and recoup their losses, but not everyone is fortunate in that way. You could hide from your customers or clients but you might be burning a lot bridges that way. A better tactic would be to take a leaf of the big companies' book and face the ones affected by your failure. You will undoubtedly get up again and have another go at running a business and you don't want to alienate people who might be useful to you.
A failed business isn't the end of your career but it can be if you don't take some care to be gracious in defeat.
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