If your first startup fails, you are about average. Most entrepreneurs fail on at least one attempt. Investors agree that an entrepreneur who has never failed probably hasn’t pushed the limits. What investors look for is not that you never fail, but that you learn from the failure, maintain a positive attitude, and work with integrity on the next one.
According to Harvey Mackay in his book Use Your Head to Get Your Foot in the Door, how to rebound from failure or rejection is an essential skill to acquire for success. His bullets are about job hunting, but I believe the principles apply equally well to starting a business:
- Analyze every failure, but never wallow in one. Failure is a condition that all of us experience. It’s our reaction to our failures that distinguishes winners from losers. A great entrepreneur is like a great racehorse. There’s no quit in them. Defeats are temporary. Heart and class are permanent.
- Don’t rationalize away the hurt. Don’t kid yourself and try to cover up the hurt with “My idea is just ahead of its time.” Don’t let your worth be defined by others. Point your head in the right direction and get back in the game. Do rethink the path, but don’t abandon the goal.
- Don’t walk around as if you’re wearing a scarlet letter. Whatever you do, don’t take a startup failure personally. It may indeed have nothing to do with you. We have just been through a recession, and big customers do change their mind. Self-pity has no positive applications.
- Start worrying when they stop considering you as a contender. Thomas Edison tried over ten thousand different experiments before he finally demonstrated the first incandescent light bulb. Henry Ford’s first two companies failed, and Bill Gates’ first company, Traf-O-Data, was a failure. Failure is staying down, not falling down.
- Don’t give in on your values. Everyone sees themselves as honest, fair and caring. Don’t sacrifice these values when the going gets tough to impress investors, creditors, partners and clients. They will be disappointed and likely not support you on your next opportunity when you need them most.
The right approach is to focus on what you can learn from your startup failure. Here are some obvious things that should give you a competitive advantage the next time around:
- You gain insight into the real market. Maybe there wasn’t a market. Or now you know what customers will pay (or won’t pay), and who the competitors really are. You finally understand what usability really means, or how important customer service really is.
- You become an experienced entrepreneur. Now you know what has to be done first. You understand all the expenses that don’t get shown in a typical business plan. You understand the importance of relationships and effective communication.
- You have built a network of key people. You know the service providers who can help you, and you know the investors that work in your territory. Most investors agree, by the way, that entrepreneurs learn more from failures than from successes. Use that in a positive way the second time around.
Overall, you become a better person when you have been humbled by failure. Now it’s likely you will be more understanding, supportive, sympathetic, wise and accepting than someone who hasn’t been there yet. Be a great entrepreneur and move from average to your best when things are at their worst.
Image credit: CC by Marcelo Moya