Written by: Toni Foot
Imagine being your own boss. You choose when and where you work, the products or services on offer and how the business is run. The possibilities are endless and you can pursue a business that allows you to turn your interests into moneymaking opportunities. However, new businesses are not easy to hold on to as the vast majority of them fail in the first few years of trading.
Be a successful failure
If you find yourself with a business that is gently drifting into failure you are not alone! Many of the most successful entrepreneurs have failed in the past, some of them quite spectacularly. The only difference between someone who is successful and someone who fails is that one gets up again. If you find yourself making the devastating decision to close down a business that was far from the business empire you had envisaged, remember that this is just a detour on your road to success, not the end. Do not think that one failed business makes you a failure. Learn from your mistakes and use that invaluable knowledge to make your next opportunity successful. In other words, be a successful failure.
Even a spectacular disaster of a business will have some assets. These may include property or office space, stock or intellectual property. You may have established a client base, employees, made useful contacts or established a brand. Good relationships with customers or suppliers can be invaluable when starting a new business so ensure you look after these, even if you have to stop trading. Remember to include your personal experience as one of the assets too. You may not be able to sell this at this point in time, but you will certainly benefit from your experience when you start any future ventures.
You may be able to sell your business or perhaps give it away and retain a percentage. Your competitors or employees may be interested in buying the business in its entirety or perhaps just some of its assets. You could consider giving it to a business student or budding young entrepreneur. If you retain a percentage you may make a profit if they are successful.
Consider what went wrong
There are many reasons why a business fails. An inexperienced entrepreneur can cause even a potential goldmine of a business to collapse. The main reason often lies in the emotional investment an individual has in their business. They believe that their product is worth more than its true market value, or are unwilling to be flexible. Just because it means the world to you does not make it invaluable to potential customers!
Other common mistakes include:
- Failure to pay taxes or keep appropriate financial records.
- Lack of planning.
- Lack of knowledge of the current market and competition.
- No understanding of pricing.
- Spending more than the business makes!
If your business does fail, think critically about what went wrong. Perhaps you made one big mistake, or maybe there were a collection of bad decisions that led to disaster. Be honest and admit your errors. You could even ask those around you for their opinions to get another point of view on what went wrong. Write a list of these issues and then consider how you could avoid making the same mistakes again. For instance, if you feel that your product didn’t sell because it was priced too high, then next time you could try being more conservative in your estimation of your product’s value and do more research into what a reasonable price would be.
Learn from your mistakes
Once you have some idea on what went wrong, you can start to work on how to be more successful in the future. Keep your list somewhere close and look back at it when you are making key decisions in your next business venture. Remember that most businesses fail due to lack of experience. Having a failed business to look back at is the most valuable experience you could have! Think of it like riding a bike: you have to fall off before you can learn how to stay on. Once you understand the potential pitfalls you can work out how to avoid them and therefore increase your chance of success. Remember: it only takes one good idea or well-run business and your failures will be a distant memory.