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Handling a Failed Startup

Every business venture has an inherent risk of failure. Even when most people commit their best efforts toward growing a startup, there’s no way to fully guarantee that a business won’t fail.

Handling a Failed Startup

Startup failures are more common than most people think. In fact, about 90% of startups eventually fail and about 21.5% of startups fail within the first year.

This shouldn’t be interpreted as something that’s meant to make business owners give up on their projects. Rather, this is meant as a gentle reminder to always prepare for the worst.

For startup owners, the worst experience is when they have to close up shop. Here are some ways to handle a startup’s failure.

Figure Out What Went Wrong

 No business fails because of luck. There will always be reasons behind the failure of the business, and while it may be difficult to revisit the failings of the business, it’s essential to identify the mistakes that were made.

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Go back to the beginning and take note of important company decisions and evaluate how these decisions affected the state of your business.

Audit Company Records

 Most major mistakes are the result of small mistakes that accumulate over time. Most of these mistakes go unnoticed and unresolved for prolonged periods, and sometimes, they may not be resolved at all.

When auditing your company records, look for missing receipts, tax payment failures, or a poor choice of product pricing. These may seem trivial on their own, but they are telltale signs of imminent failure.

You may also want to consider leveraging professional help like South Park Advisors to expedite this process and minimize the margin of error.

Evaluate Company Assets

 Evaluating your company assets allows you to determine the resources that you can work with, as well as its capacity to restart a new business venture.

This can also help you determine what you can still gain from these assets, whether by liquidating them or by using them for a new startup. Assets can come in the form of technology, patents, and intellectual property.

Learn From Your Errors

 After identifying the points of failure in your business, it’s time to go back to the drawing board and come up with better strategies to avoid the problems you encountered with your business. This process is important whether or not you plan to try again, as this helps you gain a better perspective of what you should avoid. This information may not only benefit you, but also those who entrust their business to you and entrepreneurial experience.

Try Again

 When they say that entrepreneurs never quit, this doesn’t mean prolonging a bad business venture in the hopes of better conditions.

This means that entrepreneurs should know when they need to step back to gain a better understanding of their situation and to try again with improved chances of success.

There’s absolutely nothing wrong with shutting down a startup in order to mitigate losses.

Multiple Startup Failures

Entrepreneurs fail more times than once. Handling one startup failure is difficult, but it’s important to set your expectations and to prepare for the worst.

Learning how to handle startup failures is an essential skill as this allows you to treat these failures as an opportunity to hone both your skills as an entrepreneur and your business.

This is similar to handling break-ups. These failures are worthwhile only if you take the time to understand what went wrong and how you can improve on these mistakes.

These are costly lessons to learn, but failing to learn from them will only lead to a greater loss of money. Entrepreneurs should accept failure as a likelihood instead of just a possibility. This way, they’d be far better prepared to deal with business failures both emotionally and mentally.


Dealing with a failed startup is not an easy task. It’s painful, and it makes entrepreneurs question their capabilities. If you’re dealing with a failed startup, these are the things that you need to take note of.

The information gathered during this phase will eventually contribute to the success of your next business venture. Remember that knowledge isn’t just power; it’s also profit.


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