The Ethics Coach: In Tough Conversations, Do This. Be direct and truthful. It's powerful.

Q. I need to close my company and file for bankruptcy soon. We're still finishing up a few projects, so when should I tell my team? And my clients?

A. Sorry you're going through this, but as you know, now is not the time to wallow. It's a time for action. Ideally, you'd have begun telling your employees within a day or two of deciding to shutter the company. If decision day is long past, then today is the day. Chances are, your team already senses a problem. They'll be relieved to know. And you should do it before the rumor bonfire has scorched your relationships.

Be honest and helpful to your employees. It's the right thing to do -- but also, frankly, you need them to stay and assist you. Talk to them about how you can help them find new jobs (such as making introductions or referrals) and invite them to come to you with specific needs. Explain how long you'll be able to pay them. Let them know that, although you understand it will be challenging, the remaining projects need to get finished -- and at the usual company standards. Ask each employee to commit to making it happen. If possible, offer incentives for finishing all client work.