Success has many fathers, but Failure is an Orphan. And in the world of business, failures are not rewarded – They are looked down and frowned upon.
No one talks about failures. They are what you refer to as the dark side of entrepreneurship. “The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail.” (source: shorturl.at/coyW4)
According to U.S. Census data, only 48.8 percent of the new establishments started between 1977 and 2000 were alive at age five.” (source : shorturl.at/eHM47)
The percentage is for small businesses. My study suggests that the number is a lot higher for “startups”.
Entrepreneurs and Failures:
Entrepreneurship and Failures go hand in hand. In fact, failure is an indispensable part of the entrepreneurial journey. An entrepreneur might fail in any aspect of running a business – Raising funds, delivering work, making sales. keeping employees happy or he/she can fail in something as simple as managing a work-life balance.
I know the above holds true for small business owners or employees too. So, why Entrepreneurs? Why do we focus so much on Entrepreneurs when we talk about handling failures?
To start with, Entrepreneurs in startups are always hanging by a thin wire. They are low on funds (bootstrapped startups) and are trying something new and are under tremendous pressure to succeed and are always trying to win a losing battle.
The “pressure” is nothing in comparison to what a normal business owner or a salaried person might feel. I recently met a person who had failed multiple ventures before making a comeback by succeeding with his latest venture. He said “There came a time I felt hopeless because my failed ventures made me feel like a failure in life. It was as if I had not only failed my business but failed everyone who trusted me. “
Last year when my startup rankmyleader failed, I was devastated. It was definitely not the first time one of my ventures had failed. However, what made this failure adversely affect me was the time and energy I had put in to make it work. I had worked on the idea for 5 to 6 months and was quite confident of seeing it through.
What makes failures so dangerous for Entrepreneurs?
The “uncertainty” factor is an evil devil in your mind. The devil starts playing tricky games after you fail. You might as well go crazy thinking “What next?”. I have asked the question myself hundreds of times since I started my first venture. Every time I failed, the question popped up.
A few years back, we were on the verge of closing our IT Company. We had a good-paying client who was willing to work with us long term. All plans were made – I invested in a new office. Recruited new staff and just when the final paperwork was to be done, the client changed his mind.
How did it go so wrong? Well! The project was coming through a middleman in the USA who cheated our client. The client came to know about this before he signed the agreement with him, and we were left high and dry.
Not only did we lose a substantial amount of money for leasing a new space, but we also lost our reputation in the market with employees we had hired for future roles. The element of uncertainty had hit. The detractors who always hated me for starting on my own were out with “I told you” written all over their face.
I went and spoke to our future landlord, who was not too interested in listening to a failed entrepreneur. The word spread in the market and some of our existing employees too put down their papers. Many of them were wonderful developers, who had been with us since we started.
When I look back, I can still see the sadness on their face. I could not go back to the family. (ego issues). I could not ask friends for help (prestige issue). I could not ask the bank for loans (we had just started and banks those days were not interested in lending to new ventures).
I was left to fend for myself. I had witnessed failures earlier, too, but this one was a major blow. The question I avoided the most was making all the wrong noises in my head. “What next?” was back. The element of uncertainty had crept in.
What if you cannot earn for your family? What if you have to go back to the job?
What if you have to ask your dad for help? What if you are just another failure?
Your mind starts playing the mind games in the weirdest of ways. And just when you think your mind has played enough mind games with you – You have your long extended family asking you more stupid questions.
How can your failure go unnoticed?
Here is how they make the experience more painful. (believe me, they do their bit in chastening you after your failures). In the startup world, we do not take lightly to failures. We have been taught never to fail. Failure is frowned upon. You are a loser, who took the stupid risk of investing in a venture when you could have easily invested the money in “gold” “real estate” or “Fixed deposit”.
After the above fiasco, I went into hiding. The news of our IT Company struggling was no more a secret. It took me months before I could rebound from the failure.
So how should Entrepreneurs cope with failure?
The first time I failed in a venture, I was 26. My father was the cushion to protect me from failures. He was encouraging. Without him, I wouldn’t have survived my first year in my venture.
The second time I failed (the experience I had shared earlier), I was alone. I had shifted to a new city and was almost living on my own. There was nowhere to find solace. The ugly truth of the world of entrepreneurship is – No one teaches you to handle failures.
Coping with failure is something we entrepreneurs have to learn as we learn from our experience.
Here is how I overcame my biggest failure:
After giving notice to the landlord. I started looking for a smaller place to accommodate 4 to 5 people. (yes – we were down to 5 now from a plan of hiring 20 on our existing strength of 10) I found an office (a very small space) on the 3rd floor of a building at a fraction of the rent of the last office. I sold spare furniture to get some money. Since failure was not an option. I worked harder than before.
Within a year, we were back on our feet. We expanded the existing office space to cover half of the open space. I found a new co-founder. The next time I failed, I was prepared. I knew I was taking a gamble, but it was not as catastrophic as the previous failure.
Tips for Entrepreneurs to handle failure :
· Always remember “Failures are not the end of the world.”
Do not give too much importance to what everyone else has to say about you. Failure, like success, is a phase. Spend some time analyzing why you failed. Get back on your feet and start again. Remember – do not repeat the mistakes which led to your failure.
· Stay Positive and confident:
The adverse times are not easy – You are against all the odds. I have seen worse of times but one quality which has helped me endure and sail through tough times is my confidence in myself. I might sound like someone who is unnecessarily boasting about himself but believe me, I do not give up so easily.
I have never doubted myself. Other can only support you. They cannot give you back your confidence. You have to trust yourself.
· Trust your backup plan:
I am old now (if 35 is old 🙂 ). I call myself old because I take calculated risks. A trait very much associated with the mature, old businessperson in our country. Now I try to keep a backup so that I do not end up on the road. So I have started taking calculated risks and I know when to stop.
· Recall your past successes:
Whenever I fail. I look back at my past successes. I recall how we cracked that tough “deal” or how we survived the cash crunch or how we overcame adversity to deliver a project. Recall your past successes. There is no reason why you cannot repeat your past success.
And when all else fails “be prepared to go back to the job”. Time to puncture your inflated ego. You will not belittle yourself by looking for a job. There are so many entrepreneurs who go back to a job.
The startup space is not cut out for everyone. You tried your best. Your startup failed. Don’t make a big deal out of the failure. Probably you started your startup for all the wrong reasons. You can anytime come back and start again.
About me: Jasmeet is an Entrepreneur, Avid Reader, Startup Consultant, and a Reluctant Blogger at Lessons At Startup. A regular family guy and a proud father of two adorable kids.