Updated: Oct 13, 2020
About 50% of startup businesses fail by their 5th year, and the rate goes up as businesses age. Though the statistics are shocking, that doesn’t mean business failure is inevitable or that you should fear it.
As you begin your business journey, the most pressing question you have is probably “How can I stop my business from failing?” While there are many things you can do to protect from failure, it’s also important to reframe your thinking.
Instead of always living in fear of failure, consider how it can help further shape your business goals. Find out how you can protect from failure and adapt to it. Start living and operating within the realm of confidence over fear!
Do Your Due Diligence and Research
If you’re starting a business, you probably already know this, but success doesn’t come easy. Beyond a regular job, there’s more research, prep work and general educating yourself that you’ll need to put into it.
The first step to preventing failure is putting in the proper amount of business prep work. The more work you put into your business upfront, the less likely you’ll face something unexpected.
Startup research should include everything from market analysis to personal development. Find out as much as you an about your industry, competitive landscape and target customers.
Part of your due diligence should also include developing accurate projections. If you’re seeking investment, investors will use your projections to determine whether or not they move forward with your plan. Extra funding can offer the cushion you need to keep your business moving.
Develop a Strong Business or Marketing Plan
As a new business owner, you may have heard how important it is to create a business plan. The funny thing is, there’s no template for business success. Creating a business plan might help, but it could be a waste of energy depending on your needs.
Before spending time on a business plan, consider your goals. If you’re seeking funding, investors will need to see a strong business plan. The plan should include all of the research you’ve conducted as well as your revenue projections.
On the other hand, a marketing plan could provide more focus for your business. This type of plan will help you better manage your resources. A marketing plan will also help you reach new customers and develop a strong brand for business longevity.
Work With Mentors and Partners
In business, no one can do it alone. You’ll always need help, whether it’s in the form of a business coach, a business partner or strong, reliable employees. Building a network is a great way to prevent business failure because it offers support and guidance.
Know That Plans Fail All the Time
Despite all of your research and planning, your business could still fail. Knowing this is the first step toward adapting to failure and transforming it to your advantage.
You could have the best plan that many of your peers signed off on, but unforeseen circumstances can always throw a wrench in it. Know that there are plenty of things in business out of our control, such as changes in investment and industry shifts.
Learning from Failure
When you’re facing a failing business, the best thing you can do is learn. Understand what worked and what didn’t, and make a new plan from there. If you stopped every time you hit failure, the truth is there wouldn’t any time left to do anything else.
With failure, you’ll always gain a lesson and an opportunity. Failure allows you to make a choice, whether you decide to pivot your business or take an entirely new direction.
You can always take that knowledge into your next venture. Utilizing the lessons learned, you'll already be poised to have a higher chance of success.
Accepting Failure and Using it to Your Advantage
To use failure to your advantage, you need to accept that it will be an ongoing battle. In business, there will always be failures big and small. Imagine every lesson you learn as a new pulley in your system. Every one you add, the more that you can lift.
After a failure, find the positives quickly. In many technology companies, failure isn’t only accepted, it’s encouraged. Businesses that use a fail-fast mindset are more likely to see long-term success.
Failing fast means you’re constantly testing and learning. Not everything will work, but you have to see what fails to optimize and try again.
Find Consistent Motivation
No matter how much of a strong mindset you develop, failure will always hurt. Starting a business is an emotional project, and there will be plenty of disappointment and fear along the way. We often treat our small businesses as if they are a child, and all the same emotions tend to flow.
To adapt to failure, business leaders need to find consistent motivation. That means finding something to motivate you beyond your bottom line. After you face failure, what will keep you moving to try again?
Tap into your passions and the main reasons why you want to start a business. Use your emotions to your advantage by focusing on your drive and ambition rather than your disappointment.
What you don’t want to do is start blaming yourself for failures. It’s easy to focus on negative feelings and turn them into cynicism about the future. Blaming yourself will only make it more difficult to learn from your failure.
How to Live With Business Failure
Learning to live with business failure is one of the best secrets to business success. While it’s important to prepare against failure as much as possible, it’s just as important to use failure to your advantage.
Failure is inevitable, but you can make sure you’re failing fast and doing everything you can to fail appropriately.
At Out of the Box Advisors, we offer business coaching beyond the typical advice. We understand that business is about more than what’s on paper - it’s also about your drive and passion.
Contact us today to learn how we can help.