In the realm of entrepreneurship, failure is almost always certain. It is especially true if you are starting a new career path.
In our previous story, Why startups fail in India? Explained [2020 Updated], we stated that about 90% of startups fail within the first five years of their inception (about 10% within their first year) (1).
And these stats remain pretty much relevant regardless of their respective industries.
Available data also suggest that 25% of entrepreneurs experience failure at least once before they find success (2). But, as we have already emphasized, failure is a great teacher. And according to research conducted by the Harvard Business School (3), entrepreneurs who have previously experienced failure have a higher chance of success than first-time founders.
We also want to highlight how some of the most famous entrepreneurs of our time have also experienced failures. But they ultimately found success by persisting until they conquered the market and realized their goals.
So yes, launching a new venture can be daunting if you have already experienced failure. It takes courage to be an entrepreneur, especially when starting a new business outside your comfort zone.
That is why we have prepared this article. In this story, we will highlight some of the most fundamental ways to improve your second chance at success by increasing the potential of your next big venture.
“The only real failure is the one from which you learn nothing.” – Henry Ford.
To avoid failure, consider reading our previous post, Lessons You Can Learn From Failed Startups (2021 Update). Or, keep on reading this post.
#1 First, Come to Terms with Previous Failure
A failed startup is never an issue. In fact, as we mentioned, failure is not at all negative. It is a stepping stone, a learning experience. However, it becomes a major issue if you refuse to accept failure.
Before you begin looking for your next big thing, it is critical to do a post-mortem analysis. Learn what went wrong and see what you can learn from it.
Draw a map with a backward arrow to trace out every possible pitfall you could have avoided and see how you can avoid them in your next venture.
Remember, all major blunders that you could have avoided usually come from small mistakes that went unnoticed for too long. If you can, don’t be afraid to ask for support from others.
And once you are done with the “what went wrong” phase, it is time to move and start strategizing.
Consider asking yourself a few questions like, how you could have been more accommodating to the market demand? Has your cash flow been in peril for too long? Or if you conducted the customer research thoroughly? See where you could have adopted alternative methods and reflect upon your past mistakes.
You can also consider taking a break to open your mind and reflect on what happened before getting on with your next big idea.
And if you realize that you lack any professional skills needed like marketing, management, etc., you can also consider joining a business school. Getting professional guidance will help you start a new successful venture.
All in all, accept your failure and that learning is a continuous process. However, it doesn’t mean you have to throw away your previous mistakes and experiences.
“I have not failed. I have only found 10,000 ways that won’t work.” – Thomas A. Edison.
#2 Don’t Throw Out Your Previous Learnings and Experiences
Switching to a new business or industry doesn’t make all your past mistakes, learnings, and experiences irrelevant. It is important to remember that the foundation of who you are as an individual was built by those previous mistakes and lessons.
Consider Wayne Huizenga, an American entrepreneur who founded Blockbuster Video and Waste Management Inc., as an example (4, 5). Till his demise in 2018, Huizenga used his experience from varied industries and entrepreneurial spirit to successfully found three Fortune 500 companies in industries that were completely unrelated to his skills, owned three major sports franchises and six successful brands that are now listed on the New York Stock Exchange.
Hence, it is recommended to let all your experience stay at the forefront of your mind. Of course, you will need to learn many new things, but you never know when you might come across a situation that may require you to cross-reference from your previous career.
In addition, experiencing failure will also make you realize that you need to plan for your next business way in advance, such as innovating and scaling up.
#3 Be Driven Emotionally and Financially
According to PWC research (6), as many as 79% of leaders believe that it is essential for businesses to have a purpose of finding success. And it is hard to find arguments against it.
Financial analytics and market trends are important before and after you decide to start and scale your business. However, only when you have the inspiration and understanding to move forward with your mission can you overcome disappointments and challenges integral to the entrepreneurial world.
Think of what made you choose to go out of your comfort zone to start a particular business? Maybe you have an old dream that you wish to realize or a new issue that you see and think you can solve. It could also be fulfilling a need for a loved one that inspired you to start this venture.
#4 Be Open for Any Change of Plans
Once you are driven to start your venture both emotionally and financially, it is time to assess your competitors and your USP, unique selling proposition. Find out whether your target market is big enough for sustainable growth and if it is shrinking or expanding.
Understand any barriers that can prevent you from entering the market and find ways to invade them effectively.
If you find data that tells you that your next big idea may not hold in the long run, or it won’t be able to evolve beyond the initial idea, be open to pivot. Change your plans if necessary. The key is to be flexible and trust data over emotions.
Remember, a business that pivots once or twice is twice more likely to raise money and about 50% less likely to scale itself prematurely than startups that don’t pivot at all. The earlier you adapt to real-world situations, the lower your chances of experiencing startup failure (7).
#5 Seek Answers to All Your Questions, Including Those “Stupid” Ones
As we grow old, we learn to tamp down our curiosity over the fear of looking silly and out of shame. However, many studies have highlighted that curiosity is essential for innovation (8). It helps you clarify your goal and optimize your overall brand strategy.
Remember, you are building your startup to serve your target customers. They are not experts either, and they are also likely to depend on you to help them solve an issue and meet their needs without confusing details.
“There is a notion that failure is not acceptable. A failure is an option. If things are running smoothly, you are not innovating enough.” – Elon Musk.
#6 Don’t Be Impulsive or Wait Forever
It is easy to jump at the first opportunity or fall into the trap of waiting for the “perfect” movement. It is, nevertheless, preferable if you did neither.
Remember, you can learn as you go, and if you end up making any mistakes, you can also take them as excellent learning lessons that would keep you on the right path.
If you keep on waiting, your big business idea will always remain a dream. Meanwhile, if you become impulsive and jump at the first opportunity, you may end up scaling prematurely or even experience burnout. This leads us to the next point.
“Do not fear perfection; you will never reach it.” – Salvador Dali, a Spanish artist.
#7 Avoid Burnout and Scale Wisely
Premature scaling and burnout are among the most common reasons for a startup to perform badly. If you try to get ahead of yourself, you may end up losing the battle early on.
You may be eager to start again with your new business idea and end up scaling it too quickly. However, you may run out of resources too quickly or get a total burnout if you do it. And it would be a failure story all over again.
Don’t make the mistake of burning out yourself or your resources. You may realize it too late that you weren’t prepared enough (9).
Instead of scaling impulsively, consider the below steps first:
- Understand and analyze market trends, and see if it makes sense to scale your business according to its financial projections
- Ensure that your existing customers are happy before you try to acquire new market or customers
- Keep a solid business place, find relevant and strong data to back your expansion plan
- Scale gradually and keep an eye out for any new development
- Be open to feedback
- Know what your investors want and pitch accordingly if you are looking to raise more funds
“Fail fast and fail often because failure can teach you how to be successful.” – Steve Jobs (10).
#8 Seek Experts’ Advice
Professional industry reports and literature can give you an immense amount of useful information. However, you can learn the best from the hands-on experiences of industry veterans.
We always encourage our readers to find advisors and mentors who are successful in their respective industries (Suggested reading: Peer Mentoring: A Proactive Measure Needed for Startup Success).
Finding the perfect mentor can be a difficult undertaking, and depending on your industry, you can still connect with leaders via online communities like LinkedIn and Reddit.
Make meaningful connections with industry experts, even if you are not planning on getting them on board right away. It can potentially give you a piece of invaluable insider knowledge.
As we mentioned, industry veterans often have experiences and lessons that you won’t be able to find in any reports or books. Hence, you will avoid any potential pitfalls and navigate through unfamiliar areas with fewer missteps with their help.
“From age nine, I was motivated, inspired, encouraged, and shaped by my coaches. They have left their imprints on parts that define who I am.” – Edward Stack, Executive Chairman of Dick’s Sporting Goods (11).
#9 Assemble a Team with Diverse Backgrounds
Entrepreneurs commonly make the mistake of hiring a homogenous team with similar backgrounds, skills, and industry expertise.
It is always helpful to have some members of the team that know the industry. However, you can gain more benefit with you having a team that has diverse expertise and perspectives.
Companies with diverse teams, according to the study, are more successful. 70% more likely to break into new markets and have a 19% chance of gaining higher overall revenues (12, 13).
A study by Mckinsey also highlighted that more diverse teams have as much as a 35% performance advantage over teams with less diverse backgrounds (14).
All in all, you will be able to brainstorm more quickly and strategize more brilliantly, which helps you scale more effectively with a diverse team.
#10 Learn Accepting Failures Correctly
For some reason, we have been taught that failure is a bad thing. We can also put the blame on our typical school system, which shows us success as a golden star and ridicules failure.
It is very unfortunate. Especially because, when done properly, failure is a good thing. You need courage and need to take risks to pursue entrepreneurial endeavors. And when you fail the right way, you can learn many things, including running a business and some important life lessons.
When we say failing correctly, we are talking about doing it rightly, inexpensively, and never the same way twice!
You don’t need to have a fortune and infinite time to hinge on one potential outcome.
If you don’t face the fact that your next job isn’t going to be a big thing, it becomes a bad failure (15).
It will only take your time and money away from other opportunities to lead you to your dream success story.
The most effective method is to test your business idea on smaller scales. It will allow risks to be less severe. Consider trying something that doesn’t cost heavy or is too time-consuming. See if it works on smaller scales before you take the next step. This way, even if the idea doesn’t work out, your failure won’t be devastating, both mentally and financially.
“Failure is only the end if you choose to give up.” – Richard Brandson (16).
Startups are hard most of the time. As a founder, you will invest your time, money, and all your resources into turning your business idea into reality. Then, you will have to watch whether it swims or sinks.
Often, these ideas soar and boom into a billion-dollar business.
Or, they don’t make it all. There could be several reasons behind why a startup failed. Be it the company missing its stride, a product launched at the wrong time, or an untenable business model.
Yes, it feels like the end of the world when you experience failure. However, that isn’t the case.
If you look it up on the web, you’ll find thousands of examples of entrepreneurs, innovators, and even politicians whose success is predicated upon years of failures.
So, if you’re ever down in the dumps about your failure and do not feel confident about your next big venture, here are some other key learnings we recommend you to read.
- It’s a mistake to let fear get in the way of your dreams. It is important to be aware of risks with your business. However, focus on potential success instead of chances of failure.
- There is nothing like an overnight success. You will learn nothing from immediate success. On the other hand, no matter how small or big, you will learn from every failure.
- Learn to accept failure. It is not a bad thing.
- If everything is going smoothly, it probably means that you are not pushing hard enough. You will not gain true success by sticking with the tried and tested methods.
- While it would be hard to stay optimistic after experiencing failure, retain your passion for your next big business idea. Don’t let failure kill your entrepreneurial spirit.
- Failure is acceptable as long as you do not repeat your mistakes.
- While doing things correctly at the right time is needed for startup success, a quest for the perfect opportunity will stop you from launching your business.
- Be open to change and remain flexible so you can work out to make things better.
- While failure comes in a variety of forms, most times, there are always ways to turn things around.
- You can continue to grow by constant learning, innovating, and adapting.
Finally, no entrepreneur has all the knowledge, and failures are inevitable in the entrepreneurial realm. Seek help when you need it; heed the advice of industry veterans.
The key is not to let challenges stop you from following your passion and realizing your next big thing.