“My business failed. Now What?”
If you’re wondering what to do after a business failure, you’re not alone. About 20% of businesses fail in their first year.
But just because it’s common, doesn’t make it pleasant. A business failure can feel like a very lonely thing, especially because it’s not something people like to talk about when it happens. But take heart: there is hope and you CAN rebuild your life and even your dreams of running a business.
In fact, many of today’s most successful businesses were built from the ashes of previous failures. Even entrepreneurs like Richard Branson and Mark Cuban experienced not one, but several failures on the road to billions.
“In any business, failure is an option,” writes Julia Elliott Brown after her own failed venture. “In fact, it’s inevitable if you’re trying hard enough.”
Right now, though, these are just words—we know. You’re worried about how you’ll earn back what you lost, repair damaged relationships, and rebuild your personal confidence. None of it feels good.
But there will be a day when you’ll be ready to try again. And when you do, you will have learned what it really means to be an entrepreneur: to get up and face failure again and again, until you succeed.
Consider this: Nearly all (86%) of the planet’s self-made billionaires made their money from not one, but multiple businesses. To see their journey from one business to the next is inspiring. Branson and Cuban started simple: one by selling Christmas trees, the other by selling garbage bags. Cuban is currently on his 11th business. Branson is on his 29th!
Nobody gets it perfect on their first shot. Look at Elon Musks’s journey. At one point, both SpaceX and Tesla were hours from bankruptcy.
In other words, plenty of business owners who went on to be huge success stories once stood exactly where you are today: wondering where the h*** do I go from here?”
“Life and business are all about taking risks and separating yourself from the crowd,” writes Paul Pruitt, who built a successful business, weathered a $3 million failure, and then built a second successful business. “I believe it’s a blessing to experience a major failure and draw on abilities to reboot for a second time around. We move forward with knowledge and expertise we didn’t have the first time.”
Here’s how to Rebuild After a Small Business Failure:
1. Change how you think about failure
You (and most of us) may have grown up fearing failure. It was somehow a sign of not doing well enough or not being good enough. But failure just isn’t what it used to be. Yes, it’s unpleasant, but from a different perspective it’s also incredibly valuable. How else would you have discovered what works and what doesn’t? How else would you have learned the valuable insights that can help your next business succeed? Failure isn’t so much a dead end as it is a fresh start and a learning opportunity. It’s a mark of experience, proof that you went out into the world and actually tried something and learned something from it. And that has got to count for something.
2. Look at the reasons you failed with clear eyes
Once you start looking at failure as a learning opportunity, you can make the most of the lessons it offers. Reflect on why your business didn’t work this time around. Did you fail to validate whether people truly wanted your product or service? (That’s the most common reason business owners give for failing. Here are the rest). Did you misjudge how much people were willing to pay? Answering these questions thoughtfully will put you in a stronger position the next time. Here are the hard lessons other entrepreneurs learned, gleaned from 242 startup failure post-mortems.
3. Take time to recover
Depending on your financial situation, you may need to take a brief pitstop between this business venture and the next to recover both financially and mentally. If you have a family to support or debts to pay off, taking on a full-time job may be your best course of action. It can give you a valuable steady income and room for recovery during your transition. It doesn’t have to be forever: once you’ve built up your savings and your confidence, you’ll know when it’s the right time to try a new business venture again.
Take care of your responsibilities first, so you can launch your next business from a stronger position. In the meantime, try to appreciate this stage of the journey. “In many ways, leaving a business behind is like taking off a heavy coat, and feeling that sense of freedom again; to pursue new endeavors—but with years of incredible experience that can be put to great use,” writes Julia Elliott Brown.
Once you’re strong enough to get back into the game, reflect on lessons learned the first time around, so you can avoid repeating the same mistakes. For example, if you built something only to discover there was actually no market demand for it, get unbiased feedback on your new business idea this time around. (A show of enthusiasm from friends and family does not count).
And as you rebuild, expect to make more mistakes and perhaps fail again. It’s all part of the process. “Mistakes don’t mean you should stop,” says Hera Hub founder Felena Hanson, “It means adapt, fix, pivot and keep going. Own your failures, share them, and move on.”
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