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Small Business Week Series: Cautionary Tales Every Entrepreneur Should Know
Let’s talk about the exit strategies no one posts about on LinkedIn.
When we glamorize entrepreneurship, we showcase pitch decks, press coverage, and champagne toasts. But for every founder celebrating a big win, there are many more quietly winding things down—sometimes by force, sometimes by choice.
Today’s cautionary tale? The Assignment for the Benefit of Creditors (ABC). A quieter, cleaner alternative to bankruptcy that every entrepreneur should understand before it’s too late.
“Plot twist: Your smartest move might be shutting the whole thing down.”
🧩 What Is an Assignment for the Benefit of Creditors?
In plain terms, an ABC is a voluntary business shutdown that allows you to assign your company’s assets to a third party (called an assignee), who then liquidates those assets to pay off your creditors.
It’s faster, more discreet, and less costly than a formal bankruptcy. No court drama. Less damage to your reputation.
“No shame in the ABC game—just fewer legal fees and less public humiliation.”
When Should You Consider an ABC?
- You’re insolvent (you owe more than you own).
- Your business has no realistic path to financial recovery.
- You want to protect your reputation and relationships.
- You need an exit strategy with less red tape.
“You can’t manifest your way out of unpaid invoices.”
💥 Cautionary Tale: The Founder Who Waited Too Long
Let’s call her Maya. Brilliant healthtech founder. Gorgeous brand. Burned cash faster than she could raise it.
Instead of exploring ABC, she held on—burning personal savings, ghosting vendors, hoping for a miracle investor. She didn’t get one.
Eventually, lawsuits hit. She was forced into Chapter 7 bankruptcy—a long, public process that drained her emotionally, financially, and professionally.
“Because Chapter 7 is basically bankruptcy with a spotlight.”
Had she opted for an ABC earlier, she could’ve wrapped things up privately, repaid vendors more fairly, and kept the doors open for future ventures.
🧠 ABC vs. Bankruptcy: Know the Difference
“Spoiler alert: Ego is expensive. ABC is not.”
⚖️ Questions to Ask Yourself Honestly:
- Have I reviewed cash flow with a CPA in the last 30 days?
- Are there any viable pivots left—or am I just stalling?
- Can I truly repay my debts without raising new capital?
- Am I staying in business out of strategy—or fear?
🤖 AI Can’t Save You From This One
Even in the age of AI, automated marketing, and productivity tools, some businesses still fail—not because of poor tech, but poor timing and pride.
“In the age of AI, you still need a shutdown plan with IQ.”
🛠️ Resources to Help You Exit with Strategy, Not Shame
- Bankruptcy & ABC Attorneys – ideally, ones who get startups
- Accountants/CPAs – for financial clarity
- Peer Founder Networks – because you’re not alone
💬 Final Thought
Let’s normalize conversations about exits that don’t involve acquisition headlines or yacht parties. Let’s honor founders who know when to walk away with strategy and integrity.
Because how you exit this time… determines how you enter the next.
