Don’t worry if your business died.
You just got a step closer to entrepreneurial heaven says Richard Myers, our Commercial Director who spoke to the entrepreneurs' website Startacus.
So, your first business didn’t work out the way you planned? You’ve had to call it quits or change direction? You’re back at the drawing board planning your next move?
Congratulations – you’re now a fully-fledged member of the Entrepreneurs’ Club. Don’t beat yourself up and definitely don’t categorise your experience as failure.
What just happened to you was an important part of the continual learning we all have to do in business to reach success.
If you’re keen to brush yourself off and try again then you’ve passed the acid test – you’re a born entrepreneur.
There’s no substitute for this kind of experience
You can’t learn this from a text book and from a college course. It’s the kind of wisdom you only get from the hard knocks and the big wins. The kind that makes you hungry for more.
What matters now is what you do next.
It’s important to take a step back and work out why things didn’t go as planned, so you can work out how to go forward.
That can be harder to do than it sounds because things are rarely black and white, so don’t do this on a hunch. Use data and real knowledge to build an accurate picture.
The most common reason businesses fail is because they run out of cash. If that’s the case then ask yourself why this happened.
- Were you over optimistic about how much cash you’d make? Next time be sure to do your homework so you can be absolutely realistic about your projections
- Was your pricing right?
- Your idea might have been right but were the timescales realistic? At Transmit Startups we always advise entrepreneurs to estimate how much time they need to get something started – and then double it. That’s usually the most realistic timescale to expect
- Did you manage your debtors’ book right? Did people take too long to pay you?
- Did you pick the wrong clients? It can feel counterintuitive when you’re starting up to turn down work but next time around trust your gut. When someone doesn’t feel right, then don’t do work for them. When the dust has settled take a look at your client list and draw some conclusions
- Was the market wrong? Sometimes people embark on a journey but find the market isn’t big enough or isn’t ready for them yet. There’s no shame in that. The trend is to ‘pivot’ in these circumstances – to change the direction when you realise your business model isn’t working. The trick is to not get too emotionally invested in an idea. That way you can change accordingly.
I’ve asked myself these questions over the 25 years I’ve been running start-ups and the answers are what led me to where I am today.
When people come to us for Start Up Loan and tell us they’ve already tried company number one and now they want to start company number two they always pique our interest.
Not because we think they’re a failure or look like a risky prospect but because they’ve already proved their resilience and the spirit they need to succeed. And that makes us want to back them even more.