Failure is just part of life. When we learn a new skill we fail at it time again before we get it right. It happens when we learn to ride a bike or swim. If we avoided failure altogether we’d never try anything new.
With so many startups failing, we should be sharing our experience of failure. It’s this knowledge that can help the failed entrepreneur and others learn important lessons. Not talking about one’s failure and hiding from it doesn’t help you get over it. And it certainly doesn’t help you learn from the experience. So, how should you deal with failure? Dr. Frank La Pira, a blogger and founder, The Rebel Entrepreneur, enumerates the following four steps to help entrepreneurs recover from business failure.
If you experience a failure, it’s important to talk about it to your business partners, to your employees and even to your business friends. Because it will help you better understand what went wrong, and because of its therapeutic value. Understanding what went wrong will help you in future ventures.
La Pira narrated his personal experience thus: “In our family, it has been a topic of discussion for the best part of 7 years since we lost close to 750,000. It’s not because we love to dwell on it. It’s because we have several businesses and the learnings from that experience are invaluable.
When we started sharing our experience we learnt some valuable lessons. Talking to friends in the same industry we learnt that we’d spent too much on our initial capital outlay. We had the money to spend and we just spent it. The lesson, be frugal when starting a business. There were many times towards the end when that extra money could’ve helped.”
Some questions you should consider are; did I pick the right target market, was my offering right for my market, did I understand the competitive landscape. Was my level of funding adequate for my industry/market. Did I leave too many assumptions unanswered and did I understand the industry I was getting into. Was my strategy appropriate? Or was I just a victim of an industry that has higher than average failure rates?
“When I think about those questions I can say I didn’t understand my target market, our strategy was wrong. We left too many assumptions unanswered, and we didn’t spend enough time getting to know the industry. After our business failed we took a few months off and wrote a case study on our experience. It is a therapeutic experience and worthy of your time and effort to write down what you’ve learnt,” La Pira further stated.
In the strategy literature, there’s an argument that the external environment plays a large part in the success or failure of a business. But in entrepreneurship we talk about business as if we have total control over our business. The entrepreneur is one of many factors that can cause a business to fail.
Some industries have higher failure rates. You may need a certain level of experience. Or you may need access to limited resources, that are only available to certain people. It could be that it was a competitive market full of people who are there because that’s what they love. Money is a secondary issue, think lifestyle businesses. It’s important to consider that not every industry provides the same returns.
Now you have an opportunity to refocus your goals. Through this experience, you’ve learnt a great deal about your strengths and weaknesses and about your values and beliefs. This is a great opportunity to revisit your long-term goals and strategies.
With this knowledge, you can refocus and develop a business with a better understanding of your values, and beliefs. After failure, many entrepreneurs re-evaluate their goals.
As part of the refocusing process, I recommend taking the time to focus on your own well-being. It is an emotional upheaval and taking time for yourself is important in the process of moving on.
After our business failed we decided to take several years off from operating our own business. We both joined the workforce. It is important you spend time exercising or on some other activities.
Don’t ignore your emotions. Let them out because as you try to avoid them they will linger. Use that anger and frustration to push you when you’re exercising.
Spend time outdoors. Go bushwalking, take a canoe out on a lake or swim on a beach. Ride your bike through a forest. Spending time outdoors will help you get centred.
Not everybody returns to business after a failure. But if you love the rush, excitement, and freedom of doing your own thing, you need to get back on the horse. Because nothing else will invigorate you as much. The best thing you can do is to take the learnings from that past experience into consideration in your next business. This should be part of your research when you are doing your industry analysis and building your business model.
Failure is part of life. We cannot be brilliant at everything in life the first time we try. Your role as an entrepreneur is to learn that its okay to make mistakes and fail. Yes, it is hard to recover from failure. But it will make you stronger and wiser and you will be grateful for the experiences.
- Your Company’s Success Depends On Your Sales.