Business Arcanery: Going Concern
We got so many ideas for this Business Arcanery series on MBA Mondays that I'm not going to do it as a series. I am going to do one of these every month. There is enough business arcanery out there that I could do a years worth of weekly posts without running out of material.
We'll start with the term "going concern." What the hell is a going concern?
From InvestorWords.com, "going concern" is:
The idea that a company will continue to operate indefinitely, and will not go out of business and liquidate its assets. For this to happen, the company must be able to generate and/or raise enough resources to stay operational.
Going Concern is an accounting term that makes its way into business jargon because it captures an important concept – "will the business be around for the long term?" A going concern is a business that has the cash and other resources to sustain itself. It can also be a business that has very little cash and assets but has strong and repeatable cash flow.
Accountants are required to assess whether a business is a going concern as part of issuing an opinion in an audit of a company's financial statements. I believe (but may be mistaken about this) that the business must have enough cash on hand to sustain lossses for at least the next twelve months to be considered a "going concern."
Many of our portfolio companies are not going concerns. Most startups are not going concerns. That explains the bags under most entrepreneurs' eyes. Startups are often operating at the edge, with the hope that customers or investors (or both) will come through and keep them operating.
There is no shame in failing to obtain a going concern opinion, at least in my eyes. We work with such companies all the time. I suspect every great company wasn't one before they became one.
But it is important to understand this concept. And when you are doing business with a company, it is helpful to understand whether they are a going concern or not. If they are not, make sure to get paid quickly because they might not be around much longer. And if your company is not a going concern, you should expect vendors to be more antsy about getting paid because they are doing the same calculus that you are.
The purpose of this series on Business Arcanery is to decode business code words. Going Concern decodes into "are you going to be in business long enough to pay me?"
3rd para from the bottom. ‘I suspect’ Sorry to be that guy..
not only do i want you to be that guy, i’d like to give disqus regulars the ability to go into my cms and correct copy. not sure how i would do that in an automated way.
Yeah. That would actually be a great idea.Simple text edit privileges is all that’s needed, really. Enough to fix any typos.
could be limited to one word every 24 hours. start with the most restrictive and move forward from there (if need be).
Your typos are really infrequent Fred. I would question whether a process to fix a corner case is more work than value.
Agree. That’s a slippery slope I wouldn’t want to see AVC on. I like to see a writer’s unfiltered thoughts without risk that changed meanings might occur in the fixing of typos.
Absolutely. Think about what we get from a spellchecker!
Great to meet you last week, Aaron! Your stories of work on the community college board were inspiring.
Equally as great to meet you, Karen. AVC is such an awesome and diverse group of people.
Oh goodie, editor badges?
These things, a jedi must crave not.;-)
In the words of that infamous jedi @Kidmercury:disqus : pfft!
Not really craving that badge, Rohan. I am cursed with being a natural editor. If a typo is there I will see it. Was on a nonprofit board once where everyone proofed the rewrite of the bylaws while I was absent and I just knew that I would find an error during what was meant to be the final read through. Read it with dread and sure enough, I found something, without even wanting to or trying. My response to my colleagues’ frustration was “Just think how it must feel to live inside this head?” And to my dismay, they all nodded in sympathy –like they were AGREEING with me!Thankfully as I grow older this “gift” is not as potent.I normally bypass Fred’s errors because for me they add to the charm of his writing. I wish I had his confidence that allows him not to feel the need to hyper-edit.
Ah. So sweet of you to write in detail dear Donna.Said in jest, that was. A deserving moderator jedi, you will always be. 🙂
I knew you were jesting.Had a TMI moment. :)(TMI = too much information)
TURN BLOG INTO WIKI, THAT HOW.(NOT CONDONE IDEA. JUST EXPLAIN HOW DO)
Agree with you on most things, I generally doNot this one.
NOT AGREE WITH WHAT? YOU SAY WIKI NOT ALLOW MULTIPLE EDITOR?
NOT AGREE WITH CONVERTING BLOG TO WIKIBLOG IS BLOG. WIKI IS WIKI.BLOG IS PERSONAL.WIKI IS NOT. KEEP SEPARATE, WE MUST
Thanks for the clear explanation Fred. I actually think we have an equivalent measure when it comes to people. Just that we don’t have a term for it (Trust? Dependability?) and it is unsaid. But, in our minds, we do wonder if we can trust somebody, if they are in it for the long run, if they are dependable or if they will bail out on us as we have the niggling feeling they’re in it for the quick buck.I guess it’s perfectly okay to run businesses that may not be ‘going concerns’ but.. that should be exactly opposite to how we choose to run our lives though..Because we’ll likely have many chances with business but only once with reputation and life. Happy monday all. May the force be with you! 🙂
when you look at startups through this ‘going concern’ lens – it makes it even cooler that angels and VC’s put their hands in their pockets and actually back them.Investing in an asset which is going to crash and burn in under 12 months UNLESS the entrepreneurs turns it around is pretty rock and roll.Investor: the earth is hurtling towards you at an accelerating rate, I can see that, but hey, I have faith in you. Go get it done.
What I found special about these angels and VCs is that they bet on you changing the world, then money will follow. It is altruistic, and makes economic sense. That sort of trust is very empowering for entrepreneurs.Being outside of startup hubs myself, the lack of optimism and hope can be stifling at times.
calling the thing i do “rock and roll” is a great complimentthank you LIAD
Good post. Going Concern touches so many categories from the integrety of the founders through the members of the original team through the investors and company being above board with each other.
So “going concern” = minimum viable business ?Although MVB could just become another candidate for the “arcanery” category.BTW, arcanery isn’t in Webster. What’s up with that?
I don’t think they are the same. A MVB is a business that has figured out how it will be a going concern but isn’t necessarily one yet.
I think you are right. I was thinking of MVB in the light of how prospective employees, creditors and vendors might perceive viability. Think I was confusing “viability” with “sustainability.” Speaking of arcanery.Can now better understand the value of this “series.”
The issue of how employees, creditors, and vendors “might perceive viability” and a CPA’s judgement of “a going concern” are two totally separate concepts.I doubt many employees ask for audited financial statements. Creditors and vendors do ask for financial statements, but not audited statements.Walmart requires that all their suppliers sign a statement that Walmart does NOT represent more than 25% of their annual business. But, they do not require financials to document that fact. Its just CYA for Walmart to cover themselves with if some small company goes out of business because they did work for Walmart.
Was picking up on Fred’s next to last paragraph where he began to allude to some of the more practical implications of whether or not a company is a going concern.Isn’t that what Fred is getting at — how a term that really is an accounting oriented term has become used more generally?Beyond financing related concerns, is the real issue how accountants see the company or how it is seen by the people and entities that it wants to do business with?Haven’t yet had time to read through the rest of the comments since I first visited early this morning with less than 30 comments — made by about 10 people — but eager to see how others are responding to/adding to this.
I think that ‘arcana’ would be the correct term, although without (presumably) the Tarot connotations…’Chicanery’ is the closest ‘anery’ I’m aware of that might apply.
Right. Thanks, David.arcane/arcanum/arcana: known or knowable only to the initiate; mysterious or specialized knowledge, language, or information accessible or possessed only by the initiateArcanery as a “made-up” word ironically fits its own description. Great word.
In a start up it’s often the employees who are taking the greatest risk of not getting paid. You are probably not going to get a meaningful line of credit from another company you deal with in your first 18 months of starting up.
Yes! Whenever a friend asks me about working at a startup, I always tell them1) consider whatever equity you get to be zero.2) would you work there for free?3) if you don’t work there, would you regret it in the future?It’s the same questions you’d ask yourself as a founder. You really have to do it for love. The upside is not good for the founder, and worse for early employees.For practically all cases.
wow. that is a tough hurdle. i prefer to suggest they put themselves in my shoes and ask, “if you had capital from others, would you invest it in this venture?”
For me, it’s really difficult to make sense of the counterfactual “would I invest $1M in this company.” I don’t know what 1M feels like, or taste like.I think for young folks like me, it’s really about love, hah. If I am willing to trade my time, versus, say, travelling, then it’s an indication of love. That would ultimately be better for me, and the company.
This is what I love about Gen Y (and I make the assumption you are…), Money is important but there has to be meaning and that I think is one of the reasons we are seeing such awesome things being created and generated. A going concern can only become so when people like hayeah invest time/money/skills.
I wasn’t sure at first whether you are being sarcastic. This sort of GenY mentality can also lead to sense of entitlement. Self-consciousness and search of meaning may well be narcissism.
agreed. i think part of it also is that all the safe routes are gone. not that they were really ever that safe …
From a founder perspective: Employees always get paid ahead of the founder. That includes things like taking out lines of credit guaranteed by all personal assets to make payroll.From an employee perspective: If you are growing and learning there is no better place to grow your career. In addition, let say there are ten employees. You personally are responsible for a big part of the outcome. You control your destiny.Go work for a big company as a cog in the machine and see what happens. One day McKinsey Consultant tells Board, Board tells CEO, CEO tells VP, VP tells Director, Director tells Manager: Manager cut 10% of your headcount, or worse your department is non core and we are going to outsource. See what happens to your career, even if you are the most productive in your department.You build your reputation over a career and can ruin it in one moment. That is why I never have any problems recruiting the best talent.
i’m going to steal some of your lines. they are really good.
If it is the last paragraph, I believe I stole that one from Norman Cohn.If it is the second to last, which is a mouthful, that one is mine and was the reason I could get the best ChemE recruits out of Purdue, Penn State, and Michigan, much to the chagrin of the Dupont and Union Carbide Recruiters and the campus recruiting departments when I would show up in shorts and buy beers the night before.
I like what you say that a big part of startup is about controlling your destiny and being responsible. There’s a spectrum from being a co-founder, first-employee, nth-employee, to being a cog.I am curious if it makes economic sense to be the n-th employee for a small n, rather than going all the way and be a founder.Sure, I’d be a first employee for a company I love, but I probably wouldn’t do it for the money.
Everybody wants to be the Chief but nobody wants to be the Indian. (that is definitely not my line and definitely not PC in todays world)Blessed are you if you learn from your mistakes, thrice blessed if you learn from others. (Norman Cohn)If you can learn on somebody else’s dime and then apply eventually to yourself how great is that???? Think you are going to get that at BigCo?
Older entrepreneurs have a better chance of succeeding. Yes, that you learn is a great reason to work for somebody. Nevertheless, if I think I’ll get rich as the nth employee, I am probably kidding myself.That’s why I place so much value on the intangibles, like love and learning. And equity being the real intangible.
So true about the Chief and Indian analogy Phil. I’ve found that it’s something that start ups have to be really careful of when they make their first big hires. I’ve seen too many people who will take a job on the basis that they can build their own empires soon after they start.
I don’t know about that.I was in a company where everyone wanted to be a chief. 500 chiefs, and no Indians wasn’t a great environment to be honest.
i think part of that is are you making a product or a companywhen i do ux work for startups, i get to sit inside at the beginning, contribute to the early shaping … and watch them growback in the first boom, the digital agency startups functioned as skunkworks
WORK FOR STARTUP BECAUSE WORK SHOULD MATTER.
Good points, hayeah. I especially like #3. And #1 is a practical reality. Maybe a better question for #2 is would you work there if you didn’t need an income?Seems that many times for the employees to “do it for love”, it must tie into some personal vision (or set of values) for their life or career. That is why in recruiting, it helps to learn what motivates someone. No matter how excited someone is about what you are doing, it must connect with something deep inside.
I wouldn’t call it love – i’d liken it more to obsession or religion (potato/patato)
Having recently moved from a company that is a going concern (by several billion miles) to a startup, this sort of stuff was what I was thinking before making the switch.#1 and #3 are great pieces of advice, but #2 is not.I would never work for free for anyone other than myself and family, but only after my financial responsibilities were taken care of in some other way.The day my employer stops paying is the day I’m out. I don’t care if they’re changing the world, they’d be negatively changing mine.One missed paycheck and it’s over. I’ve seen far too many situations where employees get really badly shafted by cashflow issues.
“I would never work for free for anyone other than myself and family”ABSO-FREAKING-LUTELY! Startups are *calculated* risks! If the calculations aren’t out on the table, continuously updated and scrupulously reality-tested, you’re a compulsive gambler, not an entrepreneur. It *is* a numbers game.
I agree. @donnawhite:disqus raised the point that 2) is applicable only if you don’t need an income. Most of us do. In which case, 2) is something along the line of “making enough income that your family is taken care of”.Which is still a big risk. It’s probably not enough to send the kids to college.I don’t have a family yet. So what came to my head was that as long as I don’t starve, I’ll be ok. Which I am sure is an altitude I need to change later on in life.
I take risks on this category of business often by deciding whether to help out with equity as a payment. It’s sweat equity investment not that different in commitment than what a seed investor goes through.
Time = x*Money x = your expertise 😉
True but all time is opportunity costs as well. That’s why often the evolution goes from informal mentorship to equity-based advisory position as the connection and belief gets deeper.
Yeah. Makes sense.Helps to have skin in the game.
For those of us service providers with a passion for working with startups as clients, there is sometimes the dilemma of needing to retain our own viability as a “going concern.” We can end up becoming seed investors of a certain sort.The things we do for love.
Nice. Now all of a sudden everyone has become seed investors. (Response to Pffft.. hahahahaha) 😀
(I was just fooling around.. please ignore :))On a more serious note, I think we all are.And I think we are speaking in company language.But we are seed investors in people as well. People we spend time with, mentor, coach etc. There again, it’s sweat equity. @awaldstein:disqus
Well said Donna. Certainly we are seed investors.I certainly do it for love but I really love it when they win.
Me too, Arnold. Me too.Doesn’t get much better.
Spoken like a true coach. 🙂
EVERY HUMAN IS SEED INVESTOR IN OTHER HUMAN.CROP FAIL WHEN BUSINESS STOP BEING HUMAN.
So, start ups are growing concerns?
Great to meet you last week, Jim!
You too Karen. 🙂
@JimHirshfield:disqus and you should ping me when you are in town. I can certainly suggest a good wine bar to hang out and talk marketing and Biz Dev.And Jim, we should do this sometime over the holiday season regardless.
So what happens when you see a growing concern? You sit down and tell what to the entrepreneur?
“Done well so far you have, my young padawan.Tough times lie ahead, they doWork hard for success together, we mustElse part ways, we certainly will.”
are you sure you’re not yoda?
The great master Yoda, one of a kind he wasUnparalleled in wisdom, he always wasUnparalleled in genius, he always will beOccasionally inspired by the force, I amTakes hold of me, it doesDuring those moments, Roda I become..
Hmm, Rhoda? Yeah, I used to watch that show when I was a kid.
Spelt it wrong you have, my padawanR’h’oda, it is notRoda, it is
And the ‘ha’ in Rohan stands for Hahaha? :)Sorry couldn’t help myself- that laugh is becoming your trademark.
Hahaha. Right you are! (The frequency over comments is much lesser than in person :D)
love the decoding as the final takeaway
Wasnt sure how to finish. Then recalled that phrase in last weeks post. I think i will do all the arcanery posts like that
IT BEST PART OF POST. SHOULD BE MORE THAN LAST PARAGRAPH.”AND THIS HOW TO USE IT” ALWAYS MOST INTERESTING PART.
‘How’ is generally most interesting to techies…I think ‘why’ is more interesting to true entrepreneurs though…I suspect you are the rare case where the ‘why’ drives the ‘how’ and YOU are always equally interested in both…(by the way, that’s the definition of an A player in my book)
HOW WITHOUT WHY MEAN NOTHING.WHY WITHOUT HOW DO NOTHING.ME, GRIMLOCK, NO LIKE NOTHING.
yeah, i dig a standardized format with the decoded closer
Easier to skim/parse
So a company that is a going concern should be concerned about going into business with a company that is not a going concern. And a company that is not a going concern should be concerned about going out of business because a going concern will be concerned about going into business with it. I get it.around and around the money goeswhere it stops no one knowsthe music plays until it doesn’t(this is a work in progress…)
“Are you going to be in business long enough to pay me?” just reminded me of this: http://www.youtube.com/watc… (NSFW depending on where you are)
Grammatical advice – your last two lines should really head up the definition. It would lead to better reading flow. Or kill it, the previous paragraph reads fine.In other news: Maybe we should wikify these posts to be an actual dictionary of sorts? Also, can I request an example of how said arcanery is used in a sentence (does anyone have an example?)
ABC is a going concern = normal termsA going concern, ABC is = Jedi terms
Are “RBF companies” usually going concern from your experience ? (I know RBF companies is not the best term… sorry for that)
What is RBF?
right. forgot about that one.
GOING CONCERN = DIFFERENCE BETWEEN AIRPLANE AND MISSILE.
More like Airplane and bombshell.
BOTH SELF POWERED.THAT IMPORTANT.
Vendors want you to pay right away when you are a start up but also when you have success and their invoices get larger.. I’ve had telco invoices that they wanted paid NOW since they were above the norm.
Accountants (and investors with an accountant mentality) see things in black or red. Either you’re making money, or you’re losing money. The rest is not their problem. But entrepreneurs are the creative types and will jump through the hoops and continue plugging away even if on paper the spreadsheets don’t make financial sense. So, I’m interested in hearing the creative examples for getting out of the proverbial “Going concern”.
What’s interesting is that usually early-stage startups aren’t formally having audited financial statements prepared since it is pretty expensive (and they have better things to spend their money on), so this won’t really apply to them. However, the point about cash on hand relative to net burn is a great one. Some people also sometimes confusing losing money with being a “bad shape,” when in fact operating at a loss in order to scale and continue topline growth is exactly what a startup must do in order to maintain its positive momentum.
For me, becoming a ‘going concern’ is akin to making the playoffs…it’s goal one.Once you’re there, the question is are you going to play it boring, safe, and just try not to lose (congrats, you’ve got a nice lifestyle business that you can probably grow to a certain size and have a healthy, fun, and ultimately forgettable life)…or are you going to keep pushing, continue to risk it all, and try to go big and really change the world?
Hi KevinTrue…but this is really not an either/or question re: build a lifestyle biz or attack world domination.In the early days. Even days where cash flow is paying part of the bills, are you really making that decision or aren’t you iterating forward and letting market proof dictate the path in front of you?I like to work with companies early, before they are a ‘growing concern’ because the foundation community and marketing work still needs to get done. And it’s not about spend as much as understanding and touch points with your early market.
False dichotomy. A healthy, fun, easy life provided by lifestyle business is not “‘ultimately forgettable”. Indeed, I think that trying too hard to become memorable rather than simply being a good person would bias your life choices to ego-satisfaction and insecurities, rather than creating values for people around you, and the society.I too, want to change the world. The worry (and likely outcome) is that I might not change the world, and at the same time missing out on what “really matters in life”, whatever that is.IMO.
CHANGE THE WORLD != MISS WHAT MATTER IN LIFE.CHANGE THE WORLD == WHAT MATTER IN LIFE.
You’re changing the world already by merely existing, so I wouldn’t pat anyone’s back simply for that fact. It’s probably better to contemplate whether someone’s existence was a positive one that provided some kind value to society in one way or another. This can be done either big or small.If you’re tailoring your product to a niche market, sometimes it doesn’t even make sense to “go big”. That’s your ego talking, not your product.
“When you wake up in the morning, are you changing the world or just getting through the day? Or just making money? The best innovators’ primary motivation isn’t money. They just want to change the world.” — Masahiko Yamada, President of Fujitsu’s Technical Computing Solutions Unit
Fun Topic today. My sense is the biggest problem with agoing concern opinion (paragraph in Auditor report stating that company may notbe a going concern)– is for companies that have or will likely need bank debtor some other non VC type loan (bank loan, equipment lease). Question for Fred – at what stage do yourequire your portfolio company to have an audit performed?
When real money (subjective term) starts flowing in and out of the business
It’s actually amazing when you think about it that any SaaS applications ever make it all. The reality is, almost all are going concerns in their first X years, and are being trusted with critical business data to run business operations. Pseudo-data portability really doesn’t begin to address the pain if an app powering your core business process goes under / dark. The truth is we are fortunate there is a subset of customers who are willing to bet on innovation at some real risk that innovation founders.
It is why it is a herculean task. The first question out of everybody’s mouth is: what big customer do you have that looks like me??? That is why when people whine its tough to get to see VC’s, they aren’t even thinking of the road ahead which is much tougher.
Cash flow break even is when the power shifts back to the founders from the investors.
from the investors and everyone else who wants a pound of your flesh
I like to think of it as controlling your destiny. But power is a more raw way to put it.
Sometimes a low profit going concern is harder work than a non going concern!
Wonder if “going concern” is ever applied to all these financial svcs companies that are highly leveraged like the Lehmans and the Bear Stearns etc. If you have seen the movie Margin Call one wonders if “going concern” is even something on the radar screens of those in power besides the risk assessment guys.VC’s have to assume that the startups they invest in will for amount of time be having no “going concern” and that is taken into account in valuation etc…Is there a metric that USV or other VC’s use to measure the “going concern” value in terms of a weight in the valuation equation?
Management is suppose to review VAR (value at risk) daily but it seems to be ignored in many cases.
One additional point–for accounting purposes, auditors assume that a company is a “going concern.” Assets and liabilities are valued presuming the company continues to operate in the normal course of business.If the company fails, assets (especially intellectual property) may turn out to have little or no value, and the accounting assumptions will be wrong. That’s true for any company, but the purpose of a Going Concern letter from the auditors is to warn investors that there is a significant chance the numbers on the balance sheet will turn out to be useless.VCs rarely invest on the basis of current asset value or short-term cash flow. But if you’re investing in a public company and see a “Going Concern” letter in the financial statements, be warned that key metrics like book value and earnings may turn out to be wrong.
There’s a lot of fiction in most financial statements.
“Startups are often operating at the edge, with the hope that customers or investors (or both) will come through and keep them operating.” Ah, but as they say, hope is not a strategy. If you’re on that particular edge, to be distinguished from product quality edges, your strategy needs to change.
I have seen the ‘key player’ test used as a short hand for judging whether a young company was a going concern: “If person X was hit by a bus would that cripple / kill the company?”.Most entrepreneurial concerns are not going concerns, based on this test (corner stores,etc.)
yup. which makes the founder of one of our portfolio companies motorcyle in front of our office cause me agita every time i see it
STARTUP IS INVESTMENT IN UNIQUE INDIVIDUALS.SUM NO LONGER MORE THAN PARTS WHEN ONE PART MISSING.
Good one. This is definitely a phrase that gets misused: either as a negative (emphasis on ‘concern’) or misstated as ‘growing concern’.
Interesting, for a non-native speaker (I am Polish) the term “going concern” is linguistically really counter-intuitive. Which is why learning what it really means is very valuable, thank you.
decoding business arcanery is likely to be even more useful to non-native english speakers
100% agree, in many cases we’re not even familiar with the terms you’re speaking about (at least in English)! That’s an extra layer of complexity for non-natives so by explaining it you’re reducing the barrier to entry for foreigners. Nice addition to the startup visa efforts ;-)Btw, out of curiosity – what % of your audience are non-native EN speakers? Do you measure it? Can you? are there any tools apart from traffic geolocation in analytics?
not entirely sure. about 30% of readers are outside the US, but obviously many of those are strong english speakers
So “going concern” can be viewed through different lenses -Traditional – “Steady-state” operations where growth profile flattensNascent – Maintaining mid/long-term operational viabilityI think the more interesting question is how is “going concern” used to influence strategic decisions? In the traditional sense, a “going concern” opinion could be used to affect perceptions on financial value – ie can a company’s future cash flows cover interest/principal payments for a loan or be used to calculate a terminal value in M&A discussions? How is it used in the nascent sense?
I think a majority of Internet companies could fail to ever become a “going concern” if the SOPA/Protect-IP bill passes: cdt.org/files/pdfs/NC-Analy… ….and, thanks to the broad immunity provisions in the bill, the advertising service or payment network provider has NO OBLIGATION to restore service once it receives a counter-notice.AND: …if any “portion” of the site “promoted” the infringement of any content, itwould meet the definition. For example, a blogging site, which contains millions of pages of blogs from hundreds of thousands of users, could be targeted as a “site dedicated to the theft of U.S. property” if one page or one blog on the service contains or promotes infringing content. A social networking site would be a site “dedicated to the theft of U.S. property” if one user’s page contains infringing content. An e-commerce site would be a site “dedicated to the theft of U.S. property” if only one merchant’s page sells counterfeit goods. A cloud computing service with millions of users is “dedicated to the theft of U.S. property” if one user engages in or promotes infringing conduct.”
yup, it sucks
Going concern in the accounting sense also refers to how the assets of the company are valued in the financial statements.In other words, if a company is not a going concern (it is not expected to continue trading ‘normally’ for another 12 months), then its assets will be valued on a ‘break up basis’, rather than valuing them in terms of their ongoing ability to generate income.Not 100% what this means for tech companies where much of the value in the company is intangible – I guess it would result in some pretty painful write downs as everything would be valued at its ‘market value’ today which would be an effective fire sale.
More importantly for startups, going concern can mean “are you going to be around to deliver the goods (or services)”. If you sell to a business, the business makes a commitment using your product (software for instance). They are less likely to make that commitment if you are not a going concern.
You should expand this post to cover the topics of “insolvency” (definition of insolvency, types of insolvency) as well as “the zone of insolvency”, which is a point where equity holders/board of directors technically have a fiduciary obligation to their creditors.