Home Closing Up Your Startup and Getting the Message Right

Closing Up Your Startup and Getting the Message Right

On Friday, the news we’ve known for some time was officially announced: Facebook has acquired check-in service Hot Potato. Hot Potato has updated its website with a “We’re winding down soon” message and a link to its blog post detailing the acquisition. If you’ve got to make a “going out of business” announcement, then Hot Potato’s is the kind that many startups would like to make.

When closing a business – whether it’s a happy ending or a tragic one – there are undoubtedly a number of legal and financial obligations. But in addition to notifying your lawyers and accountants, what considerations should you make for your soon-to-be-former customers?

Messaging the Closure

In announcing its acquisition, Hot Potato explains the next steps for its users:

“We’ll soon be wrapping up operations at Hot Potato. We will no longer be accepting new user registrations, and we will be offering existing users a way to download their information from the site. To do this, go to: http://hotpotato.com/dashboard/history. In about a month, Hot Potato will close up shop and delete all user data. No user data or account information will be kept by Facebook. We will be sure to keep you posted on this process over the next few weeks.”

It’s a simple message, but it answers many questions that Hot Potato users might have: What do I need to do? When will the service close? What will happen to my data? And as such, it’s a good model for breaking the “going out of business” news to customers.

Although you don’t need to detail why the business is being closed (although, clearly, acquisition by Facebook is probably worth touting), you do want to concentrate on communicating to users the information they need and they think is important, including:

  1. Give the date the business will close
  2. Inform the users of any actions they need to take
  3. Give a place for users to get their questions answered
  4. Thank them for their business

The Importance of a Smooth Transition

Arguably the transition for Hot Potato users won’t be terribly complicated. As users didn’t buy anything from Hot Potato, there’s no fuss about refunds or returns. There’s probably no resentment that users might not have read the fine print in the Terms of Service. Perhaps they’ll find another social check-in service to use. Perhaps they won’t.

But making sure there’s little or no resentment is one of the keys to maintaining customer relationships while closing shop. Because even though “going out of business” might seem like the end of that relationship, it’s not. Customers remember those bad experiences, and memories of those experiences may follow entrepreneurs into their next ventures.

Photo credits: Flickr user Jason

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