KEVIN COLLERAN: Depending on your data source, research shows that between 80% and 90% of all new businesses fail. Most people would find that fact extremely discouraging and would run back to a “safe” corporate job, forgetting all about their aspirations to be their own boss. But not an entrepreneur. An entrepreneur can’t fathom the idea of working to build somebody else’s company (and fortune) instead of pursuing their own business startup. Entrepreneurs are a crazy breed — they are wired to take these kinds of chances and risk everything, even if the odds are clearly stacked against them.
If you are one of the many aspiring entrepreneurs who have taken the leap and started your own business only to eventually fail, fear not, there is an upside that you can take away from the experience. Instead of obsessing about the negative aspects of failure, you should instead focus
the often stated but rarely believed lessons that failure makes you stronger, and increases your chances of future success. If you have failed previously in a business venture, you are lucky because your chances of success the next time around have increased.
First, there is the lesson learned from whatever it was that ended up being the key reason that caused the downfall of your previous business. Maybe it was poor cash management, the wrong product market fit, trying to grow too quickly or hiring the wrong people for the job. Whatever the reason, I can assure you that you will likely learn not to do that again in the future. You will avoid this mistake from happening again, at all costs.
Second, there are many personal lessons learned only through failure that may prove to be valuable character attributes in the future. In particular, failure teaches humility, compassion and respect for the difficulties of entrepreneurship. It’s difficult to really embody these traits until you have gone through a failure of your own. Many entrepreneurs feel a sense of invincibility during their first attempt at starting a business… until their business’s mortality becomes all too clear. Every entrepreneur firmly believes that they will be one of the lucky ones, one of the 10-20% who will be successful the first time around, until they realize that they aren’t.
Another great benefit is the acceleration of the ‘learning curve’ for future business attempts. Skills like managing people, inspiring and motivating your team, hiring and letting go of employees, as well as more general skills like legal know-how, finance and accounting are all transferrable from business to business. Once these skills are learned, they will stick with you and only strengthen in future business attempts.
A third skill that develops through failure is the intuition and instincts to know when your business’s momentum has shifted from positive to negative. During your first business, it is unlikely that you will recognize red flags and the downward trajectory of the business until it is too late. Once you have experienced a full cycle (growth, plateau and eventual decline), you will better be able to recognize the signals and stages of your new business and have more time to reverse any downward trend or pivot the business before failure is inevitable.
The chances of getting lucky and building that successful business in the first attempt are very low. This should be recognized and planned for by any entrepreneur before making the leap. If you do have the benefit of failing previously, just focus on the fact that your odds will get better the next time around due to the lessons you have already learned the hard way. The more attempts you make and the more ‘at bats’ you get will only increase the likelihood of eventually hitting a winner. The key is to make sure you don’t give up and abandon that entrepreneurial dream before you have a chance to find your success. In the end, the payoff of your determination will be worth it.