How to Overcome Business Failure
The fear of business failure keeps most people from following their dreams. Yet, if we could only accept that failure is an inevitable part of the road to success, more of us might be more willing to attempt a business venture.
Disney is not a company that we associate with failure, on the contrary. Yet, Walt Disney’s first animation studio never really got off the ground. Many of his early movies, like Pinocchio and Fantasia were financial failures. And we all know where Disney’s tentacles stretch to these days. It’s a giant amongst giants, but it didn’t start out like that.
Business literature teems with examples like this. The one thing you can learn is that you will experience failure, you can’t avoid it. So the best strategy is to prepare for it and learn from it. With that in mind, here are ten suggestions on how to overcome business failure.
1. Put together a contingency plan
Part of accepting failure as a possibility is to prepare for it by establishing a contingency plan. Having a contingency plan gives you peace of mind that you can minimize the impact should something go wrong.
A contingency plan will help you immediately set in motion planned steps to minimize the damage. If you have a plan B in place, instead of reacting emotionally, you can start executing your plan immediately, which gives you focus and prevents procrastination because of shock or disappointment.
If planned well, and executed properly, your contingency plan should help you resume business if not quickly, then at least in a reasonable time frame. Start your planning process by brainstorming the risks that your business faces, like a cyber breach or the loss of a key employee or customer.
When you’ve done that, prioritize the risks according to their potential impact. Create a contingency plan for each risk. Your main aim should be to limit possible losses.
A contingency plan will give you a certain measure of peace of mind that you’ll be able to take action should the worst happen.
Be sure to revisit your contingency plan as circumstances change and new threats appear.
2. Make an in-depth analysis of your business
In order to understand what went wrong, you need to have a good hard look at what happened. What was the sequence of events? Who was involved? Were any steps or processes omitted? Can you see what actions could have prevented the failure?
You can do this exercise by performing a SWOT analysis. This is a tried and tested business strategy to determine a company’s competitive position by analyzing its strengths, weaknesses, opportunities, and threats. A SWOT analysis will reveal internal and external factors that affect the business and highlight its potential.
- Internal factors: Strengths and weaknesses are internal factors. Strengths are the aspects of your business that are working well. Build on this. Weaknesses are the opposite: things that are not working. Look at it carefully and take appropriate action.
- External factors: Opportunities are positive external factors that benefit your business. Focus on making the best of them. Threats are adverse external factors that could harm your undertaking. New competition falls into this category. Set a plan in motion to counteract the threat.
3. Set SMART goals and develop strategies to achieve them
By setting SMART goals, you’ll gain clarity on what it is you want to achieve, beyond selling a new product or service. And it will help you create a clear path on how to get there. Goal setting takes the haphazard out of the equation and adds planning.
Specific: State clearly what you want to accomplish.
Measurable: How will you measure whether you have succeeded?
Achievable: Make sure your goals are realistic. Do you have the time and resources to achieve them?
Relevant: Your goals should align with what you want to achieve with your business.
Timely: Set a reasonable deadline to achieve your goal.
Next, develop a plan to put your SMART goals into action. Plan the steps that you’ll need to take and determine a time frame for each.
4. Seize inspiration from those who went before you
If you have failed, you are in good company. Some of the most successful people failed profoundly before they succeeded. Learn their stories and take heart from them. Their situations may even have been worse than yours is now, and yet, they managed to overcome adversity and have succeeded.
Bill Gates, Walt Disney, Oprah Winfrey, Steve Jobs, Thomas Edison, and Stephen King are all highly successful people who made valuable contributions to society in spite of business failures, being sacked, being too old, being poor or failing hundreds of times at the same thing.
Take heart from their and other inspiring life stories and tell yourself that you can do it too. You can learn about some of my business failures and also how I build multiple successful companies in my book, Entrepreneur Rx.
5. Develop a winning attitude
Prepare for failure by developing and practicing a winning attitude that you can immediately apply when disaster hits.
Elements of a winning attitude:
- This failure is just a temporary setback; it’s not the end of the world.
- This failure doesn’t mean I’m a failure.
- Failure is part of life, it happened to my business, it doesn’t define me.
- Just because this venture failed, doesn’t mean the next one will fail too.
- What is this experience teaching me? What can I do differently next time?
- This is just an exercise in adapting to a new situation. Let me adapt and learn from it.
Remember that for this attitude to work, it has to become an integral part of who you are. If you are not a naturally positive person with a deep belief in yourself, you will have to constantly work at this.
6. Prepare for success by hiring a business consultant
The fact that you have the latest, most innovative product or service to introduce to the world does not automatically turn you into a business success. It’s one thing to come up with an idea and develop it, it’s quite another thing to market it successfully. Don’t skimp on this step.
This is a financial expenditure that you might feel you can’t afford, but it can save your bacon in difficult times.
A business consultant can help with market research to analyze your target audience, be a soundboard for your business plan development, help you to move your business towards its goals, and keep an objective eye on management practices.
Crucially, if you choose your business consultant right, you’ll have access to a mentoring service that can be invaluable in challenging times.
7. Beware of emotional decisions
Emotional decisions are reactive decisions. They are not well-considered and can make matters worse instead of better.
Emotions in themselves are not a bad thing, they are just not a good basis for decision making.
One way to avoid emotional decisions is to surround yourself with level-headed people that you trust and with whom you can discuss the situation. Surrounding yourself with positive, and balanced people will go a long way to reduce your stress.
8. Manage cash flow efficiently
Healthy cash flow is crucial to running a business, but also a difficult aspect of running a business. Slow-paying customers are the number one contributing factor to cash flow problems, so from the outset, have a strategy to handle this by understanding your account receivables. Dollars in account receivables are not cash for your business.
All business owners are advised to conduct a cash flow forecast to know what money is coming in and going out. The forecast will help you to get a clear picture of your business and its chances of success or failure.
9. Surround yourself with the right people
Remember, you become like the five people you spend the most time with. So how would you characterize those five people in your life? Are they supportive and positive? Do they energize you or exhaust you? Could you depend on any one of them to be a wise mentor when things go south? These are the people you need around you.
At all costs, avoid negative people who are critical and discouraging. Surround yourself with positive people who also want to make something of themselves because they will understand your journey and support you along it.
10. Keep a balanced perspective
If you fail, it’s not the end of the world, although that’s what it might feel like. Many businesses fail every year, it’s not unusual and your experience is not unique. People recover and so will you.
To keep a balanced perspective, you need to separate the issues: the fact that your business failed doesn’t make you a failure. It probably means that you did or didn’t do something that made it happen, and if that’s the case you can learn from it.
Failure is a fact of life. To be human is to fail, we can’t avoid it. The best you can do is to be prepared for it and not take it personally when it does happen.