Some of the most successful businesses in the world only came to be after a few serious failures. From prototypes that don't work to a service that doesn't sell in your local area, a first business can quickly turn into a first failure. But can you as an entrepreneur come back into the fray and start again-successfully?
Absolutely, says Raymond T. Yeh, co-author with Stephanie H. Yeh of The Art of Business: In the Footsteps of Giants. In the book, the authors cite the histories of such companies as AOL and Intel, noting how many times failure entered the picture and how the entrepreneurs battled back. "Business failure is part of the process," says Raymond. The brightest minds allow themselves to make mistakes, learn from them, dust themselves off, and start again.
After surviving a business failure, the first thing to do is step back and take stock. "Make a list of what you did right and what you did wrong," says Raymond. "If you see the whole picture, and you're small in it, that gives you a good perspective." No matter how busy you may be, definitely set aside some time for reflection. Ask yourself objective questions, and be honest with your answers.
Reflection helped Lunden De'Leon regroup after her PR business failed in November 1999. She'd started in January of that year, signing a few entertainment-industry clients. But when her actor clients started to make it big, they signed with bigger PR firms, and De'Leon was forced to close her doors after the mass exodus. "I felt like a complete failure," says De'Leon, 30.
She took time to go back to school and became interested in the music business. "I thought about starting my own record label, and then fear kicked in," recalls De'Leon. "I thought, 'There's no way I can go through the pain and embarrassment again if this company fails.' I struggled with the idea, but with my family's encouragement, I decided to give it a try." Learning from her first venture, De'Leon's new strategy for Dirrty Records is to sign exclusive contracts with her clients and to elicit the help of her family in making important decisions for her Beverly Hills, California, business. This strategy has helped her grow her 2002 startup to $3.5 million in annual sales today.
Getting past that "once bitten, twice shy" mentality is a big challenge for second-time entrepreneurs. Mark C. Judd, 41, founder of BIDCO Marine Group, an underwater construction, maintenance and inspection service in Buffalo, New York, certainly had to overcome his earlier negative business experiences.
During the startup of his two previous diving companies, Judd encountered problems with his partners, which led to his departure from both companies. After those ventures failed, in 1991 and 1992, respectively, he started again in 1993-this time with a sense of caution regarding business relationships. Now, Judd has built his business to about $15.6 million in 2003 sales.
Success after business failure proves that entrepreneurs are more than just resourceful-they're made of some hardy stock.
If your business has failed and you want to start anew, Stephanie H. Yeh, co-author with Raymond T. Yeh of The Art of Business: In the Footsteps of Giants, suggests asking these questions about your first business venture:
- Did I put the customer at the center of my universe? Says Yeh, "Entrepreneurs can get fascinated with whatever hot idea [they have], and they don't see the customer."
- Was I passionate about this business? Why did I want to do this? Was it just for money?
- Did I target a niche? In a competitive space, did I make my company offering different? Was I better, cheaper, faster than the competition?
Honestly examining these issues can help you prepare for a new business.