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Monday, July 4, 2022

If Your Company is in Trouble You Should be Honest About it

If you’re at a lunch and start choking on that steak, you have two choices. An embarrassed or panicked person might go to the restroom to try to self-heimlich or let the problem sort itself out. Or the other option is to make sure people know you’re choking, so that that medium rare can be forcefully removed from your esophagus.

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The same goes for startups and small companies when they get into financial trouble. You can either retreat into the corner to hustle by yourself, or you can let people know the truth of your company’s livelihood. After talking to entrepreneurs and running ArcticStartup, one thing that has become clear to me is to be open about your company’s situation to leave yourself open to new connections – sometimes there’s no sense acting like a successful company.

At ArcticStartup we went through a rocky period last winter, with the original founders shutting down the company and my colleague Dmitri and I eventually taking over the brand under a new company. After the “shutdown” we found that people were hugely receptive to do deals with us to keep us alive, and to be more receptive to making deals happen for us. And it’s worked out – we’ve hired our first full-time employee and we’re really hustling down new revenue paths.

We found this new attention (and revenue) a happy surprise, and I was reminded of this stage of our story when Balancion, a Finnish personal finance solution got in touch with us to tell us their company hasn’t shut down completely, after we wrote about their shutdown in March.

As a refresher, Balancion is sort of like an European Mint that provides a user-friendly banking solution that helps analyze and budget your personal finances. The service also lets users receive tips and and monitor how you’re doing compared to financial targets.

Perhaps by using the handy Balancion tools and graphs the founders realized they were not hitting their financial targets, and decided to shut down their general consumer-facing solution. Despite that, Balancion founder Jussi Muurikainen tells us they were still hoping to sell their product to a banking institution.

“Honesty we thought no one is going to buy this service, so we maybe need to close down. Then came a new wave of negotiations,” says Muurikainen. “I was just so surprised about it. It gave some gas to the negotiations.”

Today they announce that Ebanking solution provider Crosskey has purchased the non-exclusive rights to develop and commercialize their system.

“If you succeed you should say it’s going well. And if everything is crashing down then you can’t hide it.” says Muurikainen.

“Thats my way to do [business] – to be honest all the time. Our partners have been so nice to me and trustworthy because of this style.”

Muurikainen says that this partnership isn’t the end of the story, and perhaps we’ll be hearing more from them soon.

For our readers sake, I wish it didn’t have to go into the situation where we gave the impression of added drama where we would just stop publishing one day, but it did have a profound effect on our past and new clients. So if things are going rough, tell the world about it. People don’t want to see good things die, and no one should run away from failure.

White light switch image by shutterstock.

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