Business Failure a taboo subject or something to learn from?
As an entrepreneur, I was invited by a local university to speak and share my business journey with the students. One of the questions the lecturer asked was had I had a business fail.
The lecturer seemed to be intimating to his students that a failure in business was quite normal and even to be expected. Media stories tell of entrepreneurs failing in business then growing stronger as a result so perhaps the question was to be expected.
Is it failure if you choose to leave your business voluntarily?
When is a business a failure? What about if you can see that it is going nowhere or detrimentally draining your resources?
Example One A business cannot meet monthly expenditure and outgoings from income. The business owner may borrow against other assets and then cannot make the repayments. The business fails and owes money, legally or morally. The business owner has accrued debts against their personal assets.
Example Two The same business owner as above realizes that the business will not be able to make the monthly outgoings and decides to close the business prior to further costs being incurred.
In the first example, the business owner was forced to close a failed business, and in the second, the business owner chose to close a failing business. Have you failed in business if you have had the foresight to close it down or stop trading before it swallows all your assets?
Failure as opportunity
Opportunities are there for those who are prepared to fail. Uncertainty is rife in new businesses and therefore business failure is bound to be a factor. However, failure can be seen as a valuable lesson and learning tool for the entrepreneur. Because you don’t know what you don’t know, the thought of a failure can be bigger than the failure itself.
If we see failure as a business opportunity, a learning curve and an accepted way forward, not as a stigma, then perhaps our idea of failure will be more positive. There appears to be two schools of thought, one which accepts failure with the associated social stigma and one which approaches failure in a different way seeing it as a legitimate route for an entrepreneur to take. In Europe, for example, there is a serious social stigma attached to bankruptcy, but in the USA, failure is seen as part of the learning curve. As entrepreneurs, we often experience deep personal insights into failure, transforming our view from a negative to a positive life experience.
Those with a business failure or business failings behind them may have more confidence in approaching the next opportunity as they know what failure can entail. For me, the prospect of going through a business failure as I did 20 years ago is not a welcome prospect. On the other hand, I learned so much from the experience about myself and business in general that I wouldn’t perhaps be where I am today without the experience of failure. The university lecturer certainly thought that there was a link between success and failure in business.