How Brutal Honesty Saved My Business From Going Under (Twice) Here's why saving face should come second to honesty and transparency when your company runs into trouble

This might sound crazy coming from an entrepreneur, but I've always had a thing for honesty. I despise lying and misleading because they inevitably cause more problems and create unnecessary challenges, both in one's personal life and in one's business endeavors.

Admittedly, it's not a common sentiment in the world of business, where the "fake it till you make it" mantra continues to ring loud, where the vast majority of business owners are deathly afraid of any failure and where it takes courts to extract admissions of guilt, incompetence or malfeasance.

As a former investment manager at a VC fund, I've had a front-row seat to entrepreneurship in the startup scene, which trades in smoke and mirrors like a commodity. Let me tell you — it's almost never about blatant lying. Most commonly, it's about twisting reality to craft a suitable narrative, e.g., cherry-picking growth metrics to aggrandize one's company, gaslighting customers despite legitimate complaints, making promises that are nigh-impossible to follow through, etc.

Some companies, like Theranos, manage to fool everyone—even investors—and become massive success stories, albeit sometimes short-lived. But most startups cannot keep up the charade. In the U.S., half of all startups don't make it to their fifth year.

Related: Defend Your Brand With These Strategies to Combat Misinformation in Business

Of course, failure isn't always because of dishonest practices. There are countless legitimate reasons for a company to go under.

But I know what it's like to be at that critical juncture where your company is at risk, and I know the temptation to try to weasel through it with a seemingly small white lie in the hopes of saving face until things pick up in the future.

In fact, I've been there several times. And, every time, my business and I have come out stronger on the other side by owning up to the issues and tackling them with brutal honesty and transparency. I hope my experience can encourage you to do the same — not just because it's the right thing to do, but because I believe it's good business.

1. Transparency in crisis

My startup, Supliful, is a white-label CPG platform. Our clients are entrepreneurs — influencers, companies and online business owners seeking to launch their own private-label brands effortlessly. Accordingly, when our business runs into trouble, the trouble reverberates down the chain, affecting the operations of our clients.

One such recent case was in January 2024, when we faced many operational issues while moving to a larger warehouse in response to rapid business growth. Our fulfillment times were extremely slow, leading to complaints from our users. Timely delivery is the very core of our business. If we have delivery delays, we make our clients look like fools in the eyes of their own customers — a surefire business killer and not something that can be fixed overnight.

Instead of promising the impossible, ignoring complaints, or giving up, I set up an "ask me anything" session with our customers. I stood before them, let them voice their concerns and complaints and honestly admitted where we had fallen short. After that, I directly addressed the issues, explained our current situation in detail, and provided a realistic roadmap for when things would be resolved.

Our customers are entrepreneurs, too, so they understand what it's like to have business growing pains. They also loved the transparency and appreciated being fully in the know of what exactly is going on with their fulfillment provider, gaining a clearer picture of not only our business but theirs, too. Crucially, we also delivered on the roadmap we promised them.

2. Owning up to your mistakes

Much earlier in Supliful's journey, we had a different issue with an equally critical component of our offering — we encountered a major issue with the quality of one of our products. Customer complaints were piling up, and it became clear that one of our suppliers was not meeting the necessary standards.

Again, we could have tried to brush this under the rug, claim everything's fine with the product or make up excuses to deflect blame. But the reality was that ensuring product quality for our customers is our responsibility and no one else's. If the supplier doesn't cut it, then the onus is on us to find a better one.

We took a hard look at the customer feedback and acknowledged the problem openly with them. We sent out a heartfelt apology, explained the steps we were taking to address the quality issues and took the financial responsibility by offering refunds or replacements, even though our company was already facing rough waters.

Looking back, the price we paid to retain our clients was a valuable investment — some of those who were most furious at that time are some of our biggest clients today. Again, customers appreciated our honesty, transparency and commitment to resolving the issue. Internally, it prompted us to find more reliable suppliers, ensuring better product quality moving forward.

Related: 6 Ways to Build Sustainable Principles Into Your Business

Honesty is good business

Today, transparency and honesty are the cornerstones upon which our business is built. For example, I regularly share my business data and performance updates on LinkedIn — even when the figures paint an unfavorable picture. Brutal honesty doesn't have to be a reactive thing to do reserved for when shit hits the fan.

Sharing our story publicly and directly addressing all the issues builds trust with all the partners. This gives new business owners the confidence to partner with us and our long-term customers to stick with us. It has also paid back in spades in terms of business growth.

Sure, sometimes honesty is painful. It's not easy to own up to mistakes, especially when you know that they have negatively impacted others. But doing so is critical for getting to the end goal, namely, building a robust and sustainable business that can weather any storm.