Breaking bad news is never easy, but it's important to learn how to do
so in a way that doesn't make you look like a complete tool, especially
if you want to run a successful business. If not handled correctly,
things could get totally out of hand real fast, and your employees could
all turn on you.

The best strategy for dispelling bad news is to figure out what is the most important information you have to say, fit it into one sentence, and say it exactly that without hesitation. When appropriate, try to preface the news with a short statement such as "I have some bad news."
If you need more elaboration, then here's some good advice courtesy of
Lifehacker:
Get to the Point
Prefacing
bad news with a lot of information is almost always a bad idea. While
there may be a few exceptions here and there, providing all the facts
before you get to the point creates an enormous amount of suspense and
anxiety in the listener. If you relay the information chronologically,
you may think you're explaining how your brother injured his foot. The
person hearing this story, however, will likely be worried about where
your story is going and imagine the worst. If you were writing fiction
you'd be on the right track, but when you're sharing some bad news you
need to get to the point as quickly as possible. Taking your time really
only serves to make you feel better, not the listener.

Of
course, what "the point" is can vary in levels of extremity. An injured
foot is, of course, far less of a problem than death. Saying, "Hi Jill,
Brian broke his foot and is in the hospital but he's fine now" works a
lot better than "Hi Jill, Brian's dead." Sometimes the bad news you're
bearing will require your delivery to be a tiny bit more gradual. You
definitely
do not want to waste time and beat around the bush,
but in extreme cases you may want to start with something as simple as
"I have some bad news." After that you can move right to the point. The
primary reason this is useful is because you sometimes need to indicate
that you're serious. If you say "Hi Jill, I just saw your husband Fred
kissing another woman in the supermarket," this might lead Jill to
confusion. (On the other hand, in our examples Jill just lost her
brother to a deadly foot accident so she may already be primed for bad
news.)