Your business venture may have failed, but you’ve just joined the ranks of many other entrepreneurs who moved on from their failures to come out ahead, including Steve Jobs and Bill Gates. In fact, according to the U.S. Small Business Administration, only about halfof all small businesses in this country survive five years or longer.
The reality is that entrepreneurs must plan for the prospect of failure. The financial hit you take can be depressing and perhaps overwhelming, but it doesn’t need to keep you out of the entrepreneurial game.
It’s not personal, it’s business
Many entrepreneurs are extremely passionate people, putting their heart and soul into their business endeavors. In addition to financial investment, entrepreneurs also invest a great deal of time, often at the expense of a personal life. This creates a profound sense of ownership in the businesses they create. In fact, they nurture their companies much like they would their children.
There’s nothing wrong with passion or having a personal stake in what you are doing. But you will struggle with accepting your business failure if you perceive it to be a personal failure or shortcoming. Your business failure is not your enemy, but denial about the current reality is.
Reflect and refine
Every business failure presents you with a lesson, and every lesson provides you with preparation. Take time to reflect on what happened and write down what could have prevented it, if anything. Was it a lack of capital? Did you go to market too early? Did you underestimate your target customer?
Many times business leaders need to move and act quickly, which can cause some details to slip past them. Perhaps a bit ironically, this business failure gives you the time and opportunity to assess events more thoroughly. That evaluation becomes a keen asset as you consider whether to give entrepreneurship another go.
Perhaps you want to grow your business acumen with an advanced degree. This can help you recover your entrepreneurial spirit and allow you to bring new skills to market. Your next venture could be your best yet.
Reconstructing the finances
Naturally the financial setback you’ve just experienced has to factor into calculating your next move. Like your business evaluation, you need to remove the personal element from this task. You also need to recognize your limitations. For example, do you have the experience to determine whether you can or should shuffle your investment portfolio so that it’s more aggressive, allowing you to maximize short-term gains to give you some immediate relief?
Or perhaps it makes sense to take some savings and invest it in a tool that provides you with some passive income, freeing you up to carefully consider your next move while removing some income pressures. Consulting with a financial planner doesn’t just make sense—it can provide you with some peace of mind at a time when you really need it.
Reinvent and rekindle
Once you have a clearer picture of what went wrong, take stock of what isright. Did you truly enjoy the type of business you had, or would you rather go in a different direction? Would pursuing another niche or industry fuel your energy and passion more, or do you see yourself pursuing the same path but with a different roadmap?
For example, the next time around, you may want to spend more time and energy on branding; that way you help build an identity for your business. Instead of doing this yourself, you could research branding services and hire someone who can handle these tasks.
You can also learn how to take control of social media to better promote your business and services. An online banner maker can help you create custom graphics for your social media pages, or you can hire a social media manager to ensure all your accounts are up to date and properly branded with the right promotional materials.
Surround yourself with a growth network
Entrepreneurship can be a lonely journey, which is why entrepreneurs are encouraged to have tight support networks. After a business failure and resulting financial setback, take stock of your support groups. Make sure that they facilitate not just business success, but your own professional and personal growth. A business mentor may try to nudge you into another startup because they feel the market is right, but a personal mentor will recognize that your personal timing takes precedence over the market timing.
One thing is clear: A financial setback from a business failure is a hill to climb, but you can do it with some self-reflection and examination, and relying on astute financial planning.