If you are an entrepreneur, you need to get comfortable with failure. There's a good chance that it's going to happen to you.
In fact, about 20 percent of small businesses don't make it past their first year. Nearly 50 percent won't be around to celebrate their five-year anniversary. Only one-third of establishments are still open for business after 10 years. While these sobering statistics, as reported by the U.S. Small Business Administration, may prepare business owners for the likelihood their business may fail, they don't equip SMB owners once that probability becomes a reality.
Closing a business is not the end of your story. Finding ways to deal with closing a business without being defined by it is the only way to move forward and start anew. Here are a few practical tips from entrepreneurs and business experts who know a thing or two about rising from the ashes.
Practice acceptance and self-care
Failure happens even to the best of us, so don't be too hard on yourself. Your healing process starts with taking the time to mourn your losses and rediscovering yourself without your business as part of your identity. This is a simple lesson offered by many who have weathered closing a business, but one that is hard to grasp right after shutting down your operations.
"Accepting failure is, in and of itself, tough, and sometimes it's easier to be in denial than accept that the venture you put your heart, soul, blood, and sweat into will not come to fruition," said Nitin Seth, CEO of Incedo, who faced his own business failure early in his career when he had to shut down his health and lifestyle internet company.
However, Seth recommends moving forward by finding comfort in your family and friends, refusing to define yourself solely by your work, and rediscovering the other aspects of your life you may have neglected. "There should be other interests in your life [that] anchor you," said Seth. "It could be sports, your family or a cause that you believe in passionately."
Though it's hard to acknowledge it at the time, somewhat like ripping off a Band-Aid in one quick motion, there are benefits to failing fast. One way of looking at it is that it's better to get it over with quickly so you can reduce potential losses and move on to your next venture.
"[We] want our founders to fail fast. This may sound counterintuitive, but our rationale is that entrepreneurs are innovators who will continue to create," said Karen Ellis, who, as director of economic development for the St. Louis Regional Chamber, supports startup organizations and has walked side by side with founders whose companies have failed.
"There is no reason to believe that because your most recent venture didn't end the way you envisioned it your next brilliant idea won't be the one that propels you to success," added Ellis.
Evaluate what went wrong
After taking some time to grieve, do a post-mortem of your business. "It's actually cathartic to think through what happened. There are so many lessons to learn," said Tom Scarda, a speaker, franchise expert, and author who has owned both a highly profitable business and one that failed.
It's necessary to be brutally honest with yourself and take responsibility for your actions and choices while analyzing what happened to your business and documenting both the successes and mistakes. "If you make excuses, that only stops the learning and prolongs the pain," said Scarda.
Once you know exactly what went wrong, give yourself permission to let go and move on. "Learn from the setback, drop the baggage and move forward," concluded Seth. After conducting a thorough assessment, incorporate the lessons you learned into the next chapter of your life.
Figure out your finances
Money is often a sensitive topic even in the best of situations, but when creditors are calling and you don't know where your next paycheck will come from, money may be the only thing on your mind.
Entrepreneurs who have been down this road recommend reaching out to your professional and personal networks to find a job. Working for someone else for a while before jumping into your next business venture has its benefits.
Once you have a steady gig, you will be able to earn an income, pay down debt and buy yourself some time to figure out your next move. In some instances, what starts off as a way to make ends meet may lead you to your next big idea.
This was the case for Mike Sims who created a social media app for musicians that never got off the ground. However, Sims built an entirely new business as a result of the work he took on after that initial failure. "I needed more funds just to survive after my venture ended, so I started promoting myself as a business plan writer on freelance sites," recalled Sims.
"Six months later, I was the top business planner on one of the largest freelance sites ... I soon realized that I had accidentally uncovered a unique problem for app entrepreneurs, and I had the ability to solve it," said Sims.
As a result, Sims launched ThinkLions, which helps entrepreneurs bring their app ideas to life. "While my original idea app didn't work, I have now helped dozens of app entrepreneurs build, find funding for and launch their mobile apps," said Sims.
"From my experience, I learned that failure is only a matter of perception. Where one person finds a failed venture, an entrepreneur with the right mindset can find a valuable pivot or a new opportunity," added Sims.
Build a support network
Surrounding yourself with people who genuinely care about your well-being is crucial for getting back on your feet and moving on. "Appreciate the value of relationships and build them when you need them the least," said Seth.
According to Seth, friends and family, who can provide support, offer unbiased advice, root for your success, and offer honest feedback, keep you grounded in the face of adversity. "I cannot imagine a better antidote to setbacks," added Seth.
Just as a tight circle of friends and family helps center your personal life, a solid network of business resources, mentors and fellow entrepreneurs can help get your professional life back on track when you are ready to start again. Ellis recommends joining a co-working group or a networking organization as well as tapping into national organizations such as SCORE, the Small Business Administration, the National Association of Women Business Owners and others.
Ellis said, "Once you begin thinking and surrounding yourself with other entrepreneurs, the sky is the limit. The resources you need will find you; that's just how it works." She added, "Don't forget to leverage your state and local economic developers who are more than willing to look at your business and troubleshoot barriers as well as help scale your business once it's off the ground."
Keisha A. Rivers, founder and chief outcome facilitator of The KARS Group, acknowledges that her first business venture failed due in part to her lack of connection to key professional resources. "Having a support system of other entrepreneurs who have grown successful ventures and finding a mentor would have possibly prevented a lot of the issues that I created, because I was operating in a vacuum," said Rivers.
"You'll find yourself on the losing end of the spectrum if you try to go it alone. Starting over, I made sure to connect with other entrepreneurs [and] joined a professional organization," added Rivers.
When you are ready to enter the next chapter of your life, create a roadmap of how you'd like it to look, and set measurable goals and a timeframe for meeting them.
For some, starting over may mean re-entering the workforce in a familiar industry, while others will pursue an entirely new profession. But for those who can't shake the entrepreneurial bug, it may involve starting a new business.
For these individuals, Sims recommends learning from past mistakes before jumping into a new business. "Take the time to learn and to build up knowledge in the areas that led to your venture's failure,' said Sims. "Avoid making the same mistake twice, and use your past experience to propel your future."
Similarly, Rivers advises doing your homework before launching a new endeavor. Recalling her own experience, Rivers stated, "Starting over meant that I had to take a hard look at the market, determine what would work best for me, and then create a more in-depth plan of action that included revenue and profitability projections."
Rivers added, "When starting over after a hard fall from grace, it's important to find a new venture that aligns with your passion and enables you to grow at a steady pace."
But in the end, no matter how well you prepare, starting over often involves taking a plunge into the unknown. Sometimes that means taking a chance and hoping that, in the long run, the benefits outweigh the drawbacks.
Scarda reminds entrepreneurs to not be held back by fear: "Your time is limited in regard to creating experiences for yourself and possibly creating a great business that can help the world, or at least provide a few local jobs to people who need them," said Scarda. "Remember, you will regret the things you didn't do, not the things you did."