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5 Steps for a CEO planning to present really bad news

Sometimes you just want to hide from everyone!
TW Photos

In planning your startup, the one thing you never planned for is standing in front of a large group of investors to explain they may lose their entire investment. This of course would be the result of a catastrophic failure. There are other such serious events that may be equally as painful, like:

a clinical trial failed to meet endpoints, a product launch did not go well, you need to raise more capital in a down round. There are many such events that negatively affect the investors. Some of those investors may be family and friends, some may be intuitional or angel investors. The one thing you can be certain of is that none of them will take the news well!

The reasons you are in the position may come from unexpected events. It may be that those events could not have been anticipated by anyone, yet you must stand in front of the people that supported you just to provide information that will disappoint. This is one of the most stressful times a CEO may have. This is especially true when you spent days or years developing the startup and pitching everyone on how the company would make them money on their investment.

The whole concept of Think Agile is being prepared for most any event or at least being able to react in a manner to enhance your chances of success. But there are situations where chances of success have nearly disappeared for your startup and you may have to wait until the next opportunity. You may still be able to save some of the business or find a route to a successful ending. The prospects are never over until you decide they are. Yet, you must face the group and pass along the news. The following steps are presented for your consideration because thinking ahead may lessen the pain. But be assured, you will feel pain and maybe lots of it.

1. Stop & Think: This is the point where you consider what has happened and try to understand it. For example, a group of investors reneged on investing even though you have signed deal documents. Or, after raising $300M for your company, a regulatory agency rules that the product may not be launched citing safety reasons. Maybe, you launched a product only to find that sales are a small fraction of estimates because a competitor launched a competing product. It is critical you grasp the issues leading to the problem because you are going to receive lots of questions.

2. Consider possible questions: It is easy at this point to guess at more than 80% of the questions you will receive. Some of them have no answers while others will. Your ability to anticipate the questions and develop answers will help you in the presentation. It is very hard to stand in front of people and say, “I don’t know”, when dealing with events that negatively affect them. They may not like the answers, but the truth is the best. There is no easy way to say, “The company will be closed and all assets sold to get whatever we can for debt holders.” It is best you determine what and how you want to answer as many questions as possible before you are on stage.

3. Speak: You have a scheduled meeting to present the situation and answer questions. You have prepared for one of the toughest events you will ever face. Some people will be sympathetic and understand the situation while others will be extremely angry and disgusted. You will have no control over much of anything other than what you say and how you say it. Try to remember not to respond in a manner to inflame the situation. How you speak to the group can enhance their anxiety or have a more calming effect. Answer questions and provide facts, it is not helpful to hypothesize or provide what if scenarios. You can only advise them of you plan to do going forward, it is less likely you can fix what is broken already. There is always a go forward, but it may not be the current company, it may be just you in your next startup.

4. Decompress: After the horrible meeting is over, you need time to decompress and reflect. You may even feel in shock if the event was bad enough. Your reflection is the time where you plan for the future. This may be considering all options to save the business, or start a new one. You need this time and should not short cut this step.

5. Determine next steps: This is where you decide to take steps to resurrect the business, raise more capital, and conduct studies to overcome regulatory objections, or close the business. The events should be carefully planned. You must consider the best means to execution of the plan and reduce your risks going forward. It may be possible to rebuild or redirect the business or assets. Perhaps, a new company is where you will transition and start all over again. There are always a next step! Keep in mind that many high-net-worth individuals had their share of problems along the way but managed to succeed anyway.

Taffy Williams can be found on LinkedIn, Twitter @twilli2861, ColonialTDC , photo website, Google+, Facebook, and Startup Group. He has written more than 300 articles for: Startup Blog and Examiner Charlotte, NC- small business. More on the agile concepts may be found in soon to be released book: Think Agile

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