Has your business gone off the tracks? Whether it be a startup, small business, or an individual venture- it can happen to anyone. First things first, don't beat yourself up. Stephen Shapiro, an innovation consultant, blames the undersampling of failure for feelings of inadequacy surrounding business endeavors. Remember, in our current digital, social-media ruled society, you see more success stories than failures. It skews your vision of realistic outcomes for a business. More often than not, the most successful innovators suffered through multiple failures before they succeeded. When your business goes astray, it's time to breath, assess, and reboot. These six steps will provide a map to that process.
1) Ask the Right Questions
What brought you to this point? In order to move forward correctly you need to understand how you got there, and what went wrong. Ryan Robinson, a content-marketing expert and part-time entrepreneur, has had a few failures under his belt. He now makes a living sharing his experiences with future entrepreneurs. He advises; "the first step before making any concrete decisions about your next course of action is to decompress, analyze your failure and determine the biggest contributors to why things went wrong." Once you really dig in and ask yourself the hard questions- take that information and move forward to the next step. As a business owner myself, this long analysis has been crucial.
2) Pivot Quickly
While it is important to ask questions and understand how you got to this point, you can't lament or wallow. Successful entrepreneurs act quickly and do not let fear paralyze their decision making. This is also important if your business path is affecting other founders, partners, or employees. It's not just your career that hangs in the balances, so while you do not want to make decisions in haste, more often than not you don't have the luxury of time to decide on a direction.
3) New Strategy
If you want to forge forward with your current business endeavor, then you'll need an alternate strategy. Depending on your particular situation, strategies can vary. In a recent study of the top 20 reason startups fail, two leading issues are marketing and money (running out of cash is #2).
How have you marketed your business? Have you spent too little or too much on marketing? Or focused on the wrong demographic? It might be worth bringing in a consultant to assess your product offering, marketing plan and advise on how to improve ROI. Even if you do not have the budget for a retainer, most marketing agencies will give you a low-cost or even free consultation that will provide valuable insight.
If capital and new investors are needed, explore different funding types. Scaleworks is a unique venture-equity firm. In attempts to buck the typical Silicon Valley funding model, they provide alternative funding options to startups. They work with businesses that offer potential, however may need new leadership or direction. Scaleworks even offer founders the option to exit, while bringing on a growth-focused CEO. Which brings us to our next point...
4) New Leaf
If your business has gone too far off the tracks, you might want to consider a fresh start altogether. Most entrepreneurs and business-owners choose their path for a reason, the drive to create and innovate is in their DNA. So while this particular undertaking didn't pan out, other ideas might. Utilize lessons learned from failure and apply it to your next opportunity. Keep your contacts, particularly if you are starting again in the same field. Are there resources you've acquired that can be used in future ventures?
It is also important to be humble, and realize your shortcomings. If you are worried about making the same mistakes in the future, seek out a mentor and ask for their guidance. Steve Griggs is a CEO who runs a successful design firm in NYC, he credits his success to building on the advice of other entrepreneurs he admired.
5) Close Up Shop
It is a sad reality that it's hard to start a business. According to the Small Business Association, in the past decade only 50% of small businesses last longer than 5 years, and less than one-third last longer than a decade. With the average time to turn a profit on a small business hovering around 3-5 years, these are steep odds to overcome. There is no shame in recognizing that it's time to close your business. After you admit defeat, your financial situation might mean you need to re-enter the workforce while planning your next move. Keith Speights, an investor and author, writes about the advantages of failing fast, saying it is akin to "ripping off the Band-Aid, to avoid prolonged pain, there are distinct benefits to failing quickly rather than slowly. Total losses would be reduced considerably."
6) Stay Positive
Whatever your path, the most valuable lesson is to stay positive. You chased a dream, and whether that will succeed in the future in a different form, or it didn't work out altogether, it's an admirable pursuit. Failure is not contingent of future outcomes. The road to success is often paved with rejection. At Microsoft, Bill Gates advocated celebrating failures over success, because failing was more valuable to the company in the long run. "How a business deals with mistakes suggests how well it will bring out the best ideas and talents of its people, and how effectively it will respond to change."
Bottom Line: Grow from the Experience
Any successful business owner or entrepreneur has had setbacks and detours on their road to success. When your business model goes awry, make sure understand why; ask the difficult questions. Make fast and informed decisions on your path forward. If you want to continue to swing for the fences, or decide it's time to dissolve and start fresh, don't let the defeat diminish your self-confidence.