Should I tell our customers we're in trouble or keep quiet?

Whether to inform customers about financial difficulties is a complex judgment call that depends on the severity of problems, likelihood of resolution, type of business relationships, and potential consequences of disclosure versus discovery. There's no single right answer, but several factors should guide your decision. Arguments for disclosure include: customers may find out anyway through suppliers, media, or industry gossip, and controlled disclosure from you is better than uncontrolled rumor; major customers with whom you have close relationships often appreciate honesty and may offer support or adjust arrangements to help you survive; if you're unable to fulfill orders or contracts as agreed, customers need to know to make alternative arrangements rather than being left stranded; business ethics suggest you shouldn't take customer deposits or orders if you know you probably cannot fulfill them; and customers who hear about problems from you directly with explanation of actions you're taking may maintain more confidence than those who hear third-hand. Arguments against disclosure include: customers may immediately cancel orders and move to competitors, accelerating your collapse through lost revenue; news of financial difficulty can become self-fulfilling prophecy as all customers flee simultaneously; competitors may use information to poach your customers; if you're in advanced negotiations for rescue financing or sale, premature disclosure to customers might scuttle these deals; and if problems are temporary and you have genuine realistic plans for resolution, alarming customers unnecessarily may destroy relationships you need for recovery. The decision often depends on how serious the situation is: if you're facing imminent liquidation or cannot fulfill customer orders, disclosure is both ethically required and practically necessary; if you're managing temporary cashflow problems with realistic resolution plans, selective disclosure to key customers while maintaining normal operations with others might be appropriate; if you're exploring options like CVA or refinancing but haven't reached crisis point, you might wait until plans are clearer before communicating widely. Consider different approaches for different customer segments: key strategic customers with long-term relationships may warrant direct honest conversation about challenges and your plans; smaller transactional customers may not need detailed disclosure if it doesn't affect their immediate orders; customers with advance deposits or long-term contracts deserve transparency about your ability to fulfill obligations; and customers ordering immediate delivery of readily available goods might not need to know about underlying financial stress if you can certainly fulfill their orders. If you decide to communicate, be strategic about message and timing: explain the situation honestly but focus on actions you're taking to resolve it; avoid creating panic by presenting worst-case scenarios as inevitable; be specific about what it means for customers—can you still deliver orders? Are there any service impacts?; emphasize positive steps like new investment, restructuring plans, or management changes; and choose timing carefully—don't announce problems on Friday afternoon before a weekend of uncontrolled speculation. Consider how information might spread: in B2B industries with close-knit relationships, information travels fast, so disclosure to one customer often means disclosure to all; in consumer businesses with many small customers, selective disclosure is more feasible. If you're in a regulated industry or have public company obligations, disclosure requirements may be more stringent. The worst outcome is customers discovering your financial problems through statutory demands, winding-up petitions, or sudden inability to deliver, without any prior communication—this destroys trust completely and makes customers feel deceived. Almost as bad is premature disclosure that triggers customer flight when the situation might have been salvageable with discretion. Many directors successfully navigate financial difficulties without broad customer disclosure by focusing on maintaining service, delivering on commitments, and resolving problems quickly before they affect customer relationships. Others find that early honesty with key customers brings unexpected support, extended payment terms, or advance payments that help survive the crisis. The decision requires judgment about your specific circumstances, industry norms, relationship strength, severity of problems, and likelihood of resolution. If you're unsure, seek advice from business mentors, insolvency practitioners, or communications professionals who can help assess risks and craft appropriate messages if disclosure is warranted.