Step 1. Deciding to close the project
Closing your own project is a difficult step that is always difficult to decide on. In our company, initiative usually comes from the team. Yes, yes, precisely from a team that risks being left without work, but sees an objective picture of the vague future of the project better than the founder or the board of managers.
Among the reasons that put an end to a project, there are most often two:
The project scales the lossand no matter how hard the team tries, there is no reason to continue working on the project. To put it simply, the team tried everything to “change the plus to the minus,” but the economics never started to converge.
For example, the main reason for the closure of the Turbo Assistant project was the huge costs of payroll and marketing with relatively small revenue, which for 1.5 years was still able to cover the operating costs of the project.
There are risks of force majeure, which we include loss of access to resources used in the project, inability to conduct activities in certain geographical areas, etc.
So, in March 2022, we closed the Studenterra project, an analogue of our student assistance platform “I passed everything!” to the American market. Geopolitical factors added to the difficulties with payments and acquisition channels. It was not possible to develop the project further while in Russia.
If the situation is ambiguous, then it is not clear whether to close the project now or still test a number of hypotheses for its rehabilitation, then an objective analysis will help. Using the example of the “Zakrossim” project (a platform for cross-marketing), we will consider what stages this analysis consists of:
Assessment of the current state of the project
Here we looked beyond the financials, such as costs and revenue, and compared them to the original forecasts. The picture that emerged was not very rosy: expenses grew by more than 20% month after month, but revenue remained at the same level and could not cover even 10% of expenses.
Analysis of market conditions
A few months after the launch of the project, we again looked at market trends and competitors. Despite the fact that the marketing channel market was in dire need of new players, companies were sharply cutting promotion costs and there was a trend of austerity in testing new channels.
Identifying errors at the project launch stage or during its implementation
The problem with the project was that users responded very well to the advertising and went through the first steps of the funnel, but almost no one converted until the end of the funnel. The team did not notice this fact in the early stages and continued to actively recruit.
After the closure of this project, a pre-sales testing point appeared in our launch methodology in order to obtain objective information about the future demand for the final product.
Stakeholder consultations
This is a collection of comprehensive feedback on the project from management, investors, key employees, including how they see the future of the project and whether they are ready to complete its testing.
Read on topic:
Employee burnout from boredom: how to recognize the problem and fix it
How to plan an exit so that the company does not fall apart after the founder leaves
Step 2: Develop a Closing Plan
Once the decision has been made, a detailed project closure plan must be developed. This plan should include steps to wind down operations, inform employees, support customers and minimize reputational risks.
The plan must have clear deadlines and someone responsible for each item. Below examples will show how each of these points was implemented.
After developing the plan, it must be agreed upon with stakeholders and implementation must begin.
For example, our plan for closing a project is drawn up in a checklist in the task manager:
Step 3. Informing and supporting employees
When the decision to close a project is made and you begin to implement the plan, the first and most unpleasant step is informing the entire team.
Since in our structure, key employees themselves initiate the closure of the project (less often the founder), they already know everything, but line personnel (in our case, support managers) and contractors at all levels, including developers and back office, need clarification.
We organize general meeting on Zoom or Google Meet, without giving details ahead of time, but emphasizing the importance of being present. At the meeting we will discuss the following issues:
-
reasons for project closure;
-
closing dates;
-
future fate of employees;
-
why closing the project now is the best decision;
-
answering questions and recording agreements.
I’ll stop at the point “the future fate of employees” more details. Unfortunately, it is not always possible for a company to employ the team of a closed project in other projects of the company.
Then employees are faced with the question of looking for new jobs outside the company. Therefore, the sooner an employee learns about entering the labor market, the easier it is for him to survive the crisis.
In practice, contraction with a “parachute” is less painful. For us, this is the standard two salaries if the dismissal occurs on our initiative. But, for example, individual entrepreneurs can lay off employees under the Labor Code of the Russian Federation without any additional payments, unless otherwise provided in the employment contract. Then an honest dialogue on the part of the employer will help smooth out the negativity of the dismissed employee.
You can offer assistance in finding a new job through your circle of acquaintances, invite HR for advice on writing a resume and preparing for interviews, and also create comfortable conditions for meetings with potential employers and providing recommendations.
When we closed the Turbo Assistant project, there were 15 people to be laid off, including the project manager. Years later, we can say that we did everything right, because… We continue to communicate with many of the guys on social networks.
Honesty in communication and timely assistance in disseminating information about employees’ job searches, as well as recommendations as an employer, helped to obtain new jobs in the shortest possible time.
Step 4. Winding down operations
Winding down operations is a critical stage in closing a project, otherwise you may incur significant reputational risks along with financial ones. For example, when we closed the Food Coach project (a service for personal nutritionists), we had obligations in the form of a subscription for a period of 6 months, and the closure was supposed to be completed in 1 month.
Since we informed the performers about the termination of the relationship, it would be wrong to remain the responsible person in the chain of communication between clients and nutritionists, since we could no longer be responsible for the quality of the service.
As a result, we returned all payments for a period of more than 1 month and invited nutritionists to independently continue to guide clients according to our methodology, but without any further participation on our part. Many agreed, and we thereby avoided difficulties in terms of monitoring operational activities and negativity on the network.
So, the winding down of operations in our company includes:
- Closing current tasks. We look at the entire remaining pool of tasks for the project and select only the most important and urgent ones, and simply remove the rest. We check that for each of the remaining tasks there is a person responsible and a deadline.
- Completion of contracts with contractors and suppliers. We notify all contractors about the closure of the project and the termination of contracts, observing the conditions specified in the agreements. For example, if the contract with the director contained a clause about warning of severance of relations 30 days in advance, we determine the end date of cooperation based on the agreements.
- Monitoring the completion of agreements. When all the items on the list of remaining tasks are completed, we make sure that there are no new details left that require elaboration. It is extremely important here that each point is brought to its logical conclusion.
- Transfer of data and materials to the archive. We collect all documents, data and materials related to the project, including technical documentation, reports and correspondence in the corporate archive.
Step 5. Minimizing reputational risks
To minimize negative consequences for a company’s reputation, it is necessary to carefully consider the strategy for communicating with the public, clients and partners.
The last of our closed projects is a marketplace for selling event services. There we were never able to restore the economy due to the low activity of customers and performers on the platform. Simply put, the deal (on which we were supposed to take a commission) never came to fruition.
At the time of closure, there were already more than 1,200 profiles in the performer database that were waiting for orders from us. Using this project as an example, I’ll tell you how we worked with reputational risks.
-
We released an official statement on the website and social networks that from such and such a date the project will cease to exist for such and such reasons.
-
We sent clients a personalized notification about the closure of the project.
-
Stubs were placed on the website and social networks indicating that the project was no longer working.
-
We contacted key partners to discuss further cooperation in other areas.
-
We handled all objections in support and review sites, answered questions and comments, provided clarifications and maintained a positive dialogue.
Read also: What questions are asked at a farewell interview and how to answer them
Step 6: Lessons Learned
Closing a project is not only the end of a specific initiative, but also an important opportunity for the company to learn valuable lessons. Start by holding a retrospective, gathering key project participants.
At this meeting, discuss successes and failures, creating an atmosphere of openness and trust. It is important to record the main findings and recommendations so that they are available for further analysis and use in future projects.
For example, in our company, after the closure of a number of unprofitable projects, a completely new launch methodology was born, where before starting a project we carefully analyze the market, test demand without a product, and only then launch an MVP.
Briefly about the methodology, now we set aside at least three months for the discovery phase of an idea and build a kind of pipeline of ideas – only those ideas that successfully completed the previous stage advance to the next stage. There are four such stages before MVP:
-
Preliminary analysis – we look at how well the idea corresponds to our profile and trends in the IT market.
-
Full analysis – we study the problem, similar solutions, consider the market and business model.
-
Quantitative and qualitative research – we survey potential target audiences, conduct corridor studies, surveys, etc.
-
Preliminary testing using the Fake Door method – we create a landing page or presentation with an imitation of the product and count the conversion as readiness to buy the solution.
Instead of a conclusion
Closing a project is not the end of the world, although it may sometimes seem so. It is rather the beginning of a new stage, an opportunity to stop, breathe and evaluate your strengths and resources. Sometimes it’s really better to “get off a dead horse” as quickly as possible and throw all your energy into a new project.
The key in this process is not only to minimize losses, but also to learn valuable lessons that will help in the future. Carefully and honestly communicating to employees and customers, carefully winding down operations, and managing reputational risks are all steps that turn a painful process into a manageable and less dramatic one.
Cover photo: Unsplash
Source: rb.ru
