So Your Startup Failed – What’s Next?
There is a high rate of failure for the modern-day startup. For first time entrepreneurs, that rate is even higher. This can be incredibly demoralizing and may prevent you from taking steps to learn from your mistakes. When almost half of all small business collapse within the first four years, it’s important that you don’t take business failure personally, nor as a lack of talent on your part. There can be many reasons for a business to fail, and learning just why yours didn’t work should be a priority. You can have the best business idea, the most talented staff, and a product that people want, but mistakes and external factors can all play a part in why your business didn’t work. Here’s what to do next.
Life After Failure
With business failure as a very real outcome for the modern business, it’s important that you have a plan in place should the worst happen. There are some key steps that you should take, whether you’re planning on starting a new business venture after the collapse of this one or not. Your first step is to analyze your business and assess just where the mistakes were.
Ask yourself why your business failed, and be honest with your own mistakes. Most of the reasons why businesses have to cease trading are surprisingly common. These common causes include:
- Choosing a business that isn’t very profitable
- Failure to price your goods or service properly
- Uncontrolled growth
- Inability to anticipate cash flow
Look at the history of your company and identify the main failings and the business decisions that led to them. The more that you understand, the less likely that you will repeat those mistakes in the future.
Organizing Your Finances
If your business has been your sole source of income, then you’re going to need to find an alternative revenue stream. If you have incurred debts through mismanagement or overspending, then you are going to need to address those. This can be very difficult to resolve, especially if you have been using your personal savings to keep your company going. It may be that you end up recognizing the need to file for bankruptcy. This is a logical step for those that wish to lessen the financial impact of business debts. Take the time to understand the filing process so that you know what to expect from the process. Some states have a variety of procedures and mandatory clauses involved with their bankruptcy cases, but these can all be very useful.
Decide on What’s Next
You are most likely going to need to secure another source of income. This could mean changing your mindset, dusting off your resume, and applying for jobs. Alternatively, you could consider starting a new enterprise. This is a surprisingly accessible option, especially with the variety of funding options available to the modern-day startup. Consider creating a new business plan and integrating the lessons that you have learned from your previous mistakes. Before moving forward, consider the advantages that you have this time around:
- A higher number of contacts: It’s vital that you do not alienate or distance yourself from the contacts that you have made during the running of your first business. The contacts that you have made may well become essential business assets. As a source of advice, prospective business partners or even just the best of your previous workforce, can all be utilized with the benefit of the lessons that you have learned from attempt number one.
- The mistakes that you made: Never forget those mistakes that caused your business to fail. Keep them in mind, and you will be far less likely to repeat them once you have lived through the experience of shutting a business down. Every mistake teaches you. Understand where you went wrong, and you will be much more careful.
- An understanding of the value of failure: When a business fails, the entrepreneur is often embarrassed. Don’t be. Instead, use the lessons that you have learned to talk about your experiences. You will have valuable experience as both a business owner and people manager, and those skills are not common. Talk to other entrepreneurs and offer advice if you see them making the same mistakes that you committed. You have real value, and a skill set that many will appreciate.
While no entrepreneur goes into business hoping to fail, never underestimate the value of experiencing a business that fails to launch. Understand what you have gained, and you may feel a lot more optimistic about your business future.
If you wish to continue following your business dreams, then don’t let the fact of one business failure put you off. Many successful and global business leaders have been in the same position as you are now. Learn and adapt, and your next business will have a much better chance of succeeding.