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It is unrealistic to expect your first business to be a huge success. You may have heard the oft-quoted statistic that 90% of small businesses fail. This figure is somewhat exaggerated, a more reliable figure for small businesses is that around 50% of businesses fail in the first five years.
A 50% failure rate is still not a promising statistic, especially for new entrepreneurs. If you are the leader of a start-up, your first company will obviously make many more mistakes than your second or third. No matter how good your idea is, your lack of experience will make you more likely to fail than your more experienced colleagues.
Of course, there are ways to avoid the dustbin of bad statistics. Some entrepreneurs succeed in their first attempts to build a business. For example, Elon Musk’s first company, Zip2, was successful almost immediately. Mark Zuckerberg also had very little business experience before starting Facebook.
But let’s say your first business fails. How do you use this experience to maximise your chances of ultimate entrepreneurial success?
Mental recovery
Depression, anxiety and burnout are common among entrepreneurs, even when their start-ups are successful. If you experience a major business failure after a period of excitement and hard work, you may feel particularly low. Give yourself some time to recover emotionally. Different people have different needs. For some, spending time with friends and family or in a support group is valuable; for others, it is better to spend time alone.
For example, when Steve Jobs was forced out of Apple in the mid-1980s, he wandered around Europe for a while, depressed, trying to find new motivation to carry on.
Financial recovery
If you want to maintain your career momentum, you need to recover financially. Depending on the nature of your business failure and your personal finances, you may find yourself in a vulnerable position. You may have heard stories of entrepreneurs who have lost much of their personal savings as a result of a failed business.
Analysis
It is also important to spend some time reviewing the events that led to your business failure. The motivating factors for the failure of your business will be obvious (such as a lack of money or a major customer going bust), but it is important to take a holistic view and consider all the factors that led to these outcomes. This will not only help you overcome the failure of your business, but will also teach you important lessons that you will need to learn as you build your next business.
Study the analysis of other start-ups and entrepreneurs. Talk to a mentor or more experienced entrepreneur who can give you additional guidance.
Preparing for the next opportunity
Once you have achieved some financial stability and are confident that you have learned some important lessons about the nature of your business failure, you can begin to prepare for your next opportunity. After a few months away from your previous business, you should be ready to decide whether to return to entrepreneurship or redirect your energies towards a traditional career.
Whatever you decide, it is worth to:
- expanding your network
- start attending more networking events
- talk to people in your industry
Don’t see the failure of your first business as a personal failure and don’t think it will stop you from having a successful future. For many entrepreneurs, initial failure is just the first step on a long journey – a step that can lead to a much higher level of success.
