Failure is the pillar of success. Yes, it can be daunting, and the fear of failing often prevents us from taking risks. But failure is also an invaluable learning tool and the hidden foundation of most successful businesses and innovations. Learning from our experiences helps us improve and refine ideas, setting the groundwork for future success.
Haunted by the memory of a failed business? From why businesses fail to how to revive a project, learn from your experience to revisit the ideas you care about.
Why do businesses fail?
Let’s start by setting things straight: just because your business failed, doesn’t mean you’re a failure. All the most successful people have failed before. Do you know why? Because they’ve tried. They took a risk, and it didn’t necessarily pay off the first time. Or the second. But they kept trying and, eventually, they found their own recipe for success. Failure is an act of courage. So pat yourself on the back: you’ve been brave enough to try, and now the challenge is to take the hit and bounce back.
So, why do businesses fail? Spoiler alert: here’s no straight answer. There are many reasons why businesses fail, but here are some of the most frequent ones:
Jumping in too fast
A great idea is a good start, but a successful business is built on hard work and research. Did you have a detailed business plan before taking the leap? Lack of preparation is one of the most frequent reasons why businesses fail. Did you take the time to learn more about your consumer target, their needs and their resources? Did you take all your costs into account and establish a clear projection of revenue?
Running out of money
Unfortunately, many projects fail due to a lack of money. Starting a new project often requires all your time and attention while it can take much longer to see the results of your hard work. Without a stable income or enough financing, it can get very difficult to continue developing your projects while paying your bills, especially if you have expensive set up costs and late-paying customers. Make sure you’ve put aside the resources you need to dedicate all your time and energy to your project before you get started, so you won’t have to worry about money.
Many new businesses are a one-person company. That means you have to wear many different hats with limited time on your hands. You have to manage your accounting and marketing activities on top of shipping, web design and whatever else you need for your business. Running a company alone often means you lack sufficient training in one or more areas of your business, which creates a level of complexity very few people can handle. This often leads to burnout and could be the reason why your small business failed. Don’t be afraid to ask for help, or partner with people with the skills you need to make your business stronger.
Overlooking data and business concepts
Passion is one of the main drivers of business success. But it’s not enough. Building a solid business is all about observing the market and listening to your target customers. Again, research is key to understanding your strengths and weaknesses and your best opportunities for growth. A bad location can ruin a business, and so can a poorly prepared marketing campaign. Don’t overlook the key elements of a healthy business strategy – from marketing to benchmark and customer data analysis. Losing touch with what your customers expect might make customers lose touch with your brand.
In business like in life, anything can happen. Be prepared! You might have started with a very specific business idea, but you have to be ready to iterate if you don’t get the results you expected. Not being able to adjust and adapt your project to the evolving needs of your customers can be what makes your business fail. Focus on your target audience. The pandemic is a good example of an unexpected change of context: the businesses that managed to stay afloat are the ones which stepped up their delivery game and found solutions to stay in touch with their customers’ needs (sometimes with some pretty cool marketing materials).
Failure is a part of life
It is! The first step to success is to recognise failure is not the end – it’s a step towards something better. There are many benefits to failure. It’s not just a saying: what doesn’t kill you does make you stronger. Failure teaches humility and makes you appreciate success even more – because you’ve put in the work for it. A failed project is also an opportunity to reevaluate your goals, and progress towards a better version of your idea – and of yourself.
Accept failure as a part of life. It says nothing about your value as a human being. It’s also an experience you share with most people, if not everyone. We said it before, and we’ll say it again: failing is a sign that you took a risk. You got out of your comfort zone to bring something more to the world. Be proud of having tried!
Learn from your mistakes
Nelson Mandela said “I never lose. I either win or learn.” Don’t cry over a failed project. Learn from it, and bounce back. Running a project post-mortem is the best way to understand your mistakes and draw lessons from your experience. Identify the causes of the failure, and use this knowledge to prevent them in the future. Without a project post-mortem, you run the risk of repeating the same mistakes. It will allow you to improve processes and refine your idea.
Here are a few elements to look at to get you started:
- Customers. Did they understand your product or service? Did you listen to their feedback?
- Financing. Did you calculate it right? Was anything overlooked in your preparation?
- Product & pricing. Was your product or service qualitative enough? Did people find it useful? Was it priced well?
- Positioning. Did you choose the right messaging? Was your brand perceived as you intended it to?
- Competitors. Did you have competitors offering the same quality for cheaper prices? Did you have a clear point of differentiation?
- Partners and colleagues. Was there enough people on the team? Did they have the necessary skills? Did people communicate clearly? Was there any confusion regarding people’s roles in the project?
- Suppliers. Were the items delivered on time and according to your expectations? Was the supplier transparent about their prices, quality and delivery times?
- Marketing & promotion. Did the right people hear about your offer? Did you use marketing channels the right way? Did you over- or under-invest in some channels?
- Context. Did a change in context affect your business in any way? Did you adopt, or did you stick to your original plan?
These are just starting questions to better understand what went wrong, avoid repeating the same mistakes when you start a new project, and, most importantly, to find closure.
How to revive a project
Now you know what you’d have done differently, it’s time to get back on the horse – that is, if you feel like it. Reviving a project is all about trust and hard work, whether it’s a failed business or a stalled project. Yes, it hurt the first time – so don’t start again until you feel ready. It’s perfectly alright to go back to your previous activity if you find it makes you happier. At the end of the day, success is about what makes you happy and gives you a feeling of fulfilment.
Simply changing the name of your business won’t be the answer to everything
If you’ve only put that project on hold and you feel ready to try again, there are a few things you can do to get back on track. Once you’ve run your project post-mortem and you have a clear idea of what went wrong, you can treat the problem at the root. Usually, what drove a business project to the ground is a combination of factors, so it’s important to take the time to study potential solutions – simply changing the name of your business won’t be the answer to everything. You can then follow these few principles to revive your project effectively.
Start again smaller
It doesn’t necessarily apply to all types of businesses, but it’s a good rule of thumb for most. If you’ve run out of money or burnt yourself out the first time, chances are you tried to do too much too fast. Starting small will allow you to test the waters and assess what works and what doesn’t progressively. Sure, high risks equals high rewards, but also less flexibility. It will take more time to get where you want to, but you’ll learn much more along the way and you’ll build a stronger business – maybe way different from what you had in mind in the first place.
Find (better) partners
If your ambitions go beyond your skills and resources, surrounding yourself with the right people is the best way to create solid foundations for your business. While they can be a very helpful support system in the first months or years of your project, don’t necessarily favour your friends and family as partners. Find people who complement you, people who will bring the skills that are vital to your business. You can do so through networking events – or maybe you know an old colleague who perfectly fits the description. Building a strong team with clear responsibilities is a good way to ensure the longevity of your business – and make sure no aspect of your project is overlooked.
In the words of Samuel Beckett: “Try again. Fail again. Fail better.” A successful business is one that’s flexible and able to adapt quickly. Whether you call it “fail fast” or “test and learn”, the idea is to try ideas and adjust them rapidly based on what worked and what didn’t. It can be about a small aspect of your project, like rethinking the design of your travel cup’s lid so it doesn’t leak, or about your positioning and business model. The latter is called “pivoting”– changing a significant aspect of your business for a better performing one – and successful businesses like Groupon, Starbucks and Pinterest went through this process. See? Everyone makes mistakes – what differentiates success from failure is how much you learn from it.
Revive your stalled project and bring your best ideas to life with Seth Godin’s brilliantly simple (and simply brilliant) workbook.
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