Today’s business landscape over flows with the startup ideas and efforts of entrepreneurs. Most of these hope filled endeavors will fail to take root and grow into sustaining businesses.
As an entrepreneur, the likelihood that you will fail with your current business is significant. The power of math tells you this. Scott A. Shane, professor of entrepreneurial studies at Case Western writes in the NY Times, “According to U.S. Census data, only 48.8 percent of the new establishments started between 1977 and 2000 were alive at age five.” In other words, half of new business will fail. This is the most optimistic statistic. The numbers for unfinanced startup ventures is worse. But you can use failure as a resource to move you forward.
The benefits to failing faster and fearlessly
My hypothesis is an entrepreneur who can fail better will a have greater chance of success. Additionally, even in the absence of material success the entrepreneur will gain an enhanced experience of life and be more likely to contribute to the success of others.
Benefits of failing faster and fearlessly can include:
- Learning to be attached to the problem you are solving while remaining flexible about the solution
- Kill points, rapid deployment, and real-time feedback allows for quicker pivots and more efficient redeployment of resources, but above all, it cuts losses faster
- Reduced collateral damage to friends and family
- Failing with less physical and mental damage (raising the possibility of stress free failing)
Learning to see the value of failure can also lead to removing the stigma around failure.
Overcoming stigma requires a mental reset of the associations and language surrounding failure. Here are three examples:
- To attempt something difficult and come short does not make you a loser but rather brave.
- To admit when your resources are insufficient and you are at a material end is not ignominy but instead a chance to be humble.
- Similarly repeated attempts at success are not futile if they represent persistence and patience.
Reevaluating and repurposing the language around failure is not a simple act of spin. You must reframe the negative concept as a meaningfully positive experience. So you don’t just take a word like ‘losing’ and mask it with the hyperbole of ‘winning’. Instead you must see a so-called negative tag as a chance to reassess and make room for innovation.
Study, discuss, even come to embrace failure
Sharing data and insights related to your failures is crucial, and so is learning from the mistakes of others. You should reach out to those who have failed with the knowledge that they have something of value to share.
As a community of entrepreneurs we should see to it that repositories of post-mortems are built. Post-mortems are accounts reviewing the rise and fall of a business endeavor. In addition, regular meetings and even conventions should be held to dissect, discuss, and discover what treasures can be mined from failure.
Reassessing and reframing failure is the psychological shift you need to create higher functioning organizations. There are myriad ways to build highly functional organizations with a culture that engenders improved perspectives and behaviors. One of these perspectives is the value and growth potential of failure.
Part of this potential is that by failing faster you learn faster. An example of this is the act-analyze and adjust methodology. By ‘Analyze’, I mean scientific testing. The idea is to blend creative vision-the ‘act’-with scientific method to get a stronger balance of imagination and practicality. Be willing to make and see mistakes faster and you will gain better insights.
Begin to make this shift of perspective by considering that we need failure as much as we need success. Not only do we need it, it is an inseparable aspect of material growth and success.
Some people incorrectly assume that failure is something that should or can be eliminated altogether. Failure is the flip side of success. Failure and success predict each other as steadfastly as boy predicts girl and light predicts dark. The idea that failure is somehow an option waiting to be eradicated is naïve. Be courageous and honest and accept that failure and success define each other and are part of the growth and evolution of humans.
Don’t bother trying to dispatch failure to never-never land. You are better off redefining failure and your relationship to it. As a result you will be able to see failure as a source of your momentum forward. When you embrace what you once feared you will discover new insights. Courage is just one of them.
Here are some steps you can take right away:
- Search the net for stories of failure, especially for post-mortems of startups that crashed and burned (see link below)
- Keep a journal and timeline of your own “failures” and review it from time to time
- Form a meetup in your community where other entrepreneurs come together regularly and discuss their failures
- Become more agile: have regular big picture sessions where you evaluate progress or the lack thereof and be ready to pivot, repurpose, reboot
- Establish clear kill points for constructive endings. Knowing when to cut losses and move on can help sustain your reputation, reduce damage to stakeholders, and leave you in a better place for the next step
Your business is an extension of you. Use your business as an opportunity to grow as a person and push the boundaries of your consciousness. Question your assumptions, challenge yourself to be courageous and do what is difficult. By learning to focus more on your efforts and less on your outcomes you will most certainly be a success, even in failure.
ChubbyBrain.com has an excellent list of post mortems for you to check out at http://www.chubbybrain.com/blog/startup-failure-post-mortem/
They also compiled a list of the top reasons these companies failed including:
- Being inflexible and not actively seeking or using customer feedback – Tunnel vision and not gathering user feedback are fatal flaws for most startups.
- No market need – Choosing to tackle problems that are interesting to solve rather than those that serve a market need was often cited as a reason for failure. Companies should tackle market problems not technical problems.
- Not the right team- A diverse team with different skill sets was often cited as being critical to the success of a startup company. In some cases, the founding team wished they had more checks and balances.
- Poor marketing – Knowing your target audience and knowing how to get their attention and convert them to leads and ultimately customers is one of the most important skills of a successful business. Find someone who enjoys creating and finding distribution channels and developing business relationship for the company is a key need that startups should ensure they fill.
- Ran out of cash – The question of how should you spend the money was a frequent conundrum and reason for failure cited by failed startups. The decision on whether to spend significantly upfront to get the product off the group or develop gradually over time is a tough act to balance.
- No biz model – 1 of 4 failure post-mortems cite the lack of a business model as a reason for failure.
- Product mistimed – If you release your product too early, users may write it off as not good enough and getting them back may be difficult if their first impression of you was negative. And if you release your product too late, you may have missed your window of opportunity. “This requires balance
- Lack of passion and domain expertise – product can be created that the founders are expert at but the industry is not something they can be bothered learning about so they don’t really understand what the customers want from the product.
- Failure to pivot – not pivoting away from a bad product, a bad hire, a bad decision, etc quickly enough often cited as a reason for failure
- User ‘unfriendly’ product
- Pricing issues
- Didn’t use network – Whether it was for advice or introductions, almost 16% of the startup post-mortems stated that the team did not use their connections well enough, which led to failure.
- Disharmony on team – acrimony isn’t limited to the founding team, things go bad with an investor, and it can get ugly
- Lost focus – Getting sidetracked with all the ‘could-bes’ was cited numerous times as a contributor to failure. Focus on one product and get it out there.
- Burnout – Work life balance is not something that startup founders often get and so the risk of burning out is high. The ability to cut your losses where necessary and re-direct your efforts when you see a dead end is also connected to having a diverse team.
- Out competed
- No financing
- Bad location
Do you recognize any of these in your business?
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Atma ( http://askatma.com )