If Your First Business Doesn't Succeed . . .
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(YoungBiz.com) - You've heard the statistics: Half of all new businesses fail in the first year. And of those that succeed, only 25 percent make it five years or longer.
Sure, you think to yourself, you've seen the numbers. And while you feel for the entrepreneurs that those stats apply to, well, truth be known, you just don't see yourself in that category.
You'd probably be hard-pressed to find an entrepreneur who would. After all, perseverance, tenacity, a never-say-die attitude--these are all traits that drive entrepreneurs, against all odds, to build multimillion-dollar companies.
But what do you do if your worst fear does come true and you've got a failing biz on your hands? That's what 'treps Sharlene and Desi Metcalf had to face--though not for the reasons you might expect.
Three years ago, sisters Sharlene and Desi Metcalf launched GidgetGear, their own private label of surfwear and accessories based in Whittier, California. It was an entrepreneur's dream come true, as sales began rolling in right from the start. "Things were really taking off," Sharlene recalls. "We even planned to launch a second line."
Then Sharlene and Desi received a letter from an attorney notifying them that GidgetGear was violating another company's trademark on the name Gidget. "We had already invested a lot of money in our business, and we couldn't afford to fight the trademark challenge," Sharlene says.
Efforts to strike a deal with the owner of the trademark failed, and Sharlene and Desi were faced with no choice but to dissolve the business. "In the meantime, we had $15,000 worth of merchandise to get rid of, just to pay back the start-up money our parents had loaned us."
Though the sisters were able to sell some of their merchandise, much was left unsold. Since they couldn't sell it, they did the next best thing--they gave it away. It was a smart way to deal with their company's debt.
"We donated our entire leftover inventory to a home for abused children," Sharlene says. "It was hard to see it go, but it went to people who really needed it." Sharlene and Desi were able to use the donation as a tax deduction, which helped decrease their losses.
Despite their bad experience, Sharlene, now 20, and Desi, 19, have proven they are resilient--and that this is not the end of the story. "GidgetGear was a great stepping-stone," Sharlene says. "We definitely love clothing, so I don't see that we'll be out of this business forever."
Businesses fail for lots of reasons. There might not be a big enough demand for your products or services. Perhaps you and your partner aren't the great match you thought you'd be. Or maybe you don't have a big enough cash reserve to make it over the hump--and you just can't justify any more debt.
Whatever the reason, if you decide to throw in the towel, remember that there's a lot to be learned from a business failure. Here are just a few examples of how, if it happens to you, to see the glass as half full.
Failure by another name might be . . .
- Education. Failing in business may be some of the best business education you can get. So, rather than looking at a failed company as a "failure", think of it instead as an "experiment", a stepping stone to something greater. Failing forces you to take a good look at yourself, figure out what's not working and why, and see how to make it better.
Think about times you've failed, whether in school, a past job or your personal life. At that time, it may have been the worst moment of your life. But, looking back, you'll see failure was a pivotal moment that forced you to take a different, better path.
- Perspective. Call five entrepreneurs you know and ask them to describe their biggest failures. Ninety-nine percent of successful business owners have failed at some point and will tell you it's the greatest thing that's happened to them.
The best way to get through the lows is to be clear about your vision. When it seems as if a mistake is the end of the world, sit back, look at what you're creating and ask, "Is it worth the fight to get where I want to be?"
If, despite your very best attempts, you can't make your business go, learn from your experiences and move on. What you see as a failure right now might indeed be the first rung on your ladder to success.