“Every success is a rectified failure”, the French author Charles Pépin made this statement full of truth. Usually, business failure is seen as a weakness. Intellectual and emotional stability will allow us to decide whether we take it as a catastrophe or a learning experience. Remember, if you have learned to walk, you know how to overcome failure.
According to the Failory platform, 2 out of 10 startups fail in the first year of operation, 5 in the fifth and 7 in the tenth year. But the most important thing about this statistic is not how many failures there are, but why do they fail?
Main Reasons Why Business Fail
Each company is different, there is a huge variety of niches and therefore, all live a different reality. The circumstances and resources are diverse, but actions or situations have been identified that are often replicated among entrepreneurs. According to Failory, these are the 5 most common:
A serious mistake that can lead you to failure is to believe that your business is perfect. Excessive love for your idea and lack of self-criticism prevent us from keeping our eyes open and analyzing changes in the market or a possible stagnation.
Sales numbers and customer feedback are an excellent parameter to know if we are on the right track. Even when the results are positive, it is necessary to make constant improvement processes. Perfection does not exist, needs vary over time, being receptive and adapting to changes is a responsibility.
Immerse yourself in social media, read news, get advice from experts and keep your ears open in your daily dealings with customers, staff and close circle.
If you have the best product or service on the market, but people don’t know about it, it will be a waste of time, money, and effort. The implementation of a marketing plan is the difference between a successful business and a nice memory.
Know your target audience, understand their needs, and analyze which media they interact with (social networks or websites). Make yourself present with useful content and position your brand as an authority in your sector.
The results will not be immediate, but effort and perseverance will allow you to get them in the medium term. If this sounds out of your comfort zone, you can turn to marketing agencies to implement strategies tailored to your business.
Regardless of the size of your business, having an excellent team of collaborators is essential to achieve success. It all starts from the recruitment and hiring process. Be careful with the people you hire for your staff as they will accompany you in this adventure. In addition to their work history, take into account their personality and how it would match with their peers or even with yours.
Good coexistence is key to achieving business objectives. The basis of a good team is assertive and empathetic leadership, with clear guidelines that reduce misunderstandings.
Most small businesses focus on improving the product, generating sales, promoting the brand, and then forget about the human capital. Remember that your team who helps navigate the ship. Give them the importance they deserve!
Using the company’s money for personal reasons, failure to plan, not utulizing the best small business loans, and poor pricing standardization are all reasons why a company can go bankrupt. Not only that, if it has investors, these actions can leave them in debt for a long time.
In financial matters, the best advice is to manage them with surgical order. From the moment you start your business, record all cash flows, have separate accounts for all resources, and check your prices and profit percentages periodically. These habits will save you a lot of headache.
A company’s efficiency depends on good operating practices. Errors in this area can impact the rest of the activities. When you identify any failure, analyze where it comes from. It may be communication issues, management, or task assignment for each position.
The best way to solve these problems is to explain the tasks of each role and develop operating tutorials to improve efficiency. When hiring your personnel, implement an induction process and provide training. Remember, astronauts aren’t trained in a week.
How To Overcome Business Failure
If we start from the basic principle (those who try something have the probability to fail), it opens possibilities that for the rest of our life it will continue to happen, no matter what the project is. For this reason, we must conclude the failure is a learning process. Business failure doesn’t make us losers, it makes us human.
But how do we overcome it? Dealing with failure involves a step-by-step process: grief, acceptance, introspection, resilience to rise from this misstep, and preparation for what comes next. Take into account these four points, which will facilitate your return to the business world.
To determine the time of financial recovery, the impact of the failure must first be determined. Before investing more, decide whether it’s best to start from scratch or just modify some strategies. If you do not have an emergency fund, you can rely on the small business loans to address the most urgent needs.
After working so hard and giving everything for a business that failed, the recovery process can be hard. It’s okay to feel sad, anxious, or even depressed. Analyze your emotions and work to heal from this loss. Spend time with your family, rest and engage your mind in other activities to get your brain’s gears turning again. You can turn to disciplines such as coaching to overcome this episode in a healthy way.
Create a circle of trust
People who overcome business failure are those who have the most personal support. Surround yourself with people who encourage and motivate you to follow your path of entrepreneurship. Don’t let toxic people hurt you more or influence you to throw away your dreams.
Do a Post Mortem Process
It is important to understand what went wrong, it is even more essential to understand why it happened. Avoid self-flagellation, focus on analyzing thoroughly and digging to find moments of inflection, not just the most obvious causes. Write down the main lessons and learn from the business failure.
Learn from Business Failure
For the whole process to make sense, apply your new knowledge once you start over. From the beginning of your new adventure, implement what you have learned and take advantage of the previous business failure to stand with your head raised, ready to conquer the world.
Value the effort you made with your previous venture. Remember, it was not all bad. Don’t forget to replicate the good practices you did.
Take into consideration these tips to make this new challenge work wonderfully:
- Know your market better
- Have a vision for the future
- Hire specialists
- Don’t idealize your business
- Don’t be afraid of change
- Listen to your customers
- Make tests, use the Minimum Viable Product
- Improve your planning
- Use the best small business loans
The writer Charles Dickens said “Every failure teaches a man something he needs to know.” This phrase has two totally useful concepts. The first one, the relationship of failure with learning, is without a doubt the most valuable and the most important. A defeat that does not bring us knowledge is nonsense.
The second one, understand that each head is a world, and each company is one too. Books and courses share about situations that happened to others, and sometimes it’s complicated to associate them with what we are going through. Our failure will be the opportunity to be better entrepreneurs, but above all, to be better persons.
Consider business failure as part of the road to success. Remember, it is not the destination that’s important, it is definitely the road. Rise from the ground and make use of all the teachings left by failing. Do everything in your power to be successful, so when you achieve it, you can share your knowledge of how you overcame.
Never hide your failures, make them visible, share your experience and stop trying to be perfect. The most important thing is to trust that this learning will take you to the top. Can you share with us what has been your biggest failure and what you learned from it?