# Decision Framework: When to Shut Down

## Legitimate Reasons to Shut Down

### Financial Reasons
1. **Out of money** - Can't fund operations, can't raise more
2. **No path to sustainability** - Unit economics fundamentally broken
3. **Opportunity cost too high** - Founders need income, no traction

### Team Reasons
1. **Co-founder conflict** - Irreconcilable differences, company suffers
2. **Founder burnout** - Mental/physical health at serious risk
3. **Key person leaving** - Can't continue without them

### Market Reasons
1. **Market disappeared** - External change killed the opportunity
2. **Regulation blocked** - Can't operate legally
3. **Dominant competitor** - No realistic path to compete

### Product Reasons
1. **Can't achieve product-market fit** - Tried many iterations, no love
2. **Problem not painful enough** - Users don't care enough to pay/use
3. **Technical impossibility** - Can't build what's needed

## Signs It's NOT Time to Quit

1. **Just rejected by investors** - Investors are often wrong
2. **Competitor launched** - Competition validates the market
3. **One bad month** - Startups have ups and downs
4. **Features are hard to build** - Technical challenges are solvable
5. **Slow growth** - Could be execution, not fatal

## The Honest Assessment

Ask yourself:

1. **In 12 months, with perfect execution, where could we be?**
   - If answer isn't compelling: Consider shutting down

2. **Would you join this company as employee #1?**
   - If no: Why are you running it?

3. **Do you believe this can be a big company?**
   - If no: Might be lifestyle business or time to stop

4. **Are you learning and growing?**
   - Even failed startups should develop you

5. **What would you do if you stopped?**
   - Sometimes the answer reveals your true feelings

## How to Shut Down Well

1. **Communicate early** - Tell team, investors when decision is made
2. **Return money if possible** - Good faith with investors
3. **Help team land** - Use network to place employees
4. **Close legally** - Proper dissolution, no loose ends
5. **Document learnings** - For yourself and others
6. **Take time off** - Recover before next thing

## Key Resources to Load

1. `3S-when-to-shut-down-a-startup.md` - When to quit
2. `95-default-alive-or-default-dead.md` - Financial health check
3. `3Z-advice-for-companies-with-less-than-1-year-of-runway.md` - Low runway advice
4. `8t-the-18-mistakes-that-kill-startups.md` - Understanding failure modes
5. `5l-how-not-to-fail.md` - Avoiding failure

## Questions to Ask the User

- How much runway do you have left?
- What have you tried to get to PMF?
- How are you and your co-founders feeling?
- What would you do if you stopped?
- Is there a smaller version of this that could work?

## Important Note

Shutting down is not failure if you learned and tried honestly. Many successful founders had failed companies before their big win. The key is:
- Shut down before destroying yourself
- Learn from what happened
- Apply learnings to next venture
