Once More, From The Top: When Your Business Fails

Sometimes, small businesses fail. Would you have to strength to pick yourself up and try it again?

Most small businesses fail.

I bet you’ve heard that before. And different sets of people who have committed their careers to helping small business owners seem to react to that fact in different ways.

On the one hand, some of the people who offer pre-startup counseling to would-be small business owners use their position to be as discouraging as possible, apparently operating under the theory that not starting a business is preferable to starting one that fails.

The problems with that attitude are so blindingly obvious that they don’t really need to be rehashed here.

On the other hand, people like me — that is, people who write for microbusiness owners — seem to have an unspoken rule of silence. The lone unmentionable in the microbusiness literature that is available in most places is failure. After all, our job is to bring you the information you need to avoid failure. If you use that information the way you’re supposed to, then the subject shouldn’t come up, right?

There are any number of problems with that notion, too, not the least of which being that we small business writers are not perfect. Neither are you. All of us make mistakes.

Besides, when it comes to getting good information, running a small business is a lot like becoming a parent. Lots of people have done it successfully before you, and many of those people are more than willing to give you the benefit of their experience. Sadly, most neophyte microbusiness owners are unlikely to know just exactly what kind of advice they really need. Their very inexperience works against them.

So they may very well follow somebody’s advice and assume, when it doesn’t work, that it was bad advice. And it probably wasn’t. It may well have been really great and accurate information, but it wasn’t quite what they needed.

The same thing goes for business research. Anna Campbell, who currently owns and operates Anna’s Candles, made that discovery with her first, unsuccessful, fudge selling business. She had done all the research a good would-be business owner would do: research into recipes, market research, promotional materials, etc.

Unfortunately, it wasn’t until after she had launched her business and developed a small customer base and all appropriate marketing materials that she couldn’t get FDA approval because she was a home-based business. And, as she put it, “I had to be covered from head to toe in insurance that I couldn’t afford…”

That’s another thing about running your own small business, by the way. According to statistics provided by the National Commission on Entrepreneurship, most small business owners don’t have vast amounts of experience in the field in which they start their business. So, even when they are doing everything they are supposed to do to research their venture thoroughly, precisely because they are inexperienced in that field there’s a good chance there will be something they’ll overlook.

There are any number of reasons why a microbusiness might fail but, in some ways, the ‘why’ doesn’t matter. Regardless of why, it happens. It happens all the time. The U.S. Small Business Administration estimates that a whopping 70% of small businesses don’t make it to see their second birthday. And it is precisely because so many small businesses fail that somebody really ought to be talking about it.

Because when a new microbusiness fails, its owner has to figure out what to do next.

Not only that, but they have to make that decision in the wake of what is usually a real blow. The failure of a small business can affect its owner in any numbers of ways, from fear to frustration to seriously diminished self-esteem. But no matter what the specific feelings are, I’ve never heard anybody call it a pleasant experience.

Under those circumstances, it is sometimes a real struggle for such a businessman or woman to make the decision to pick themselves up, dust themselves off and try it again.

What is really interesting is how many of them do it, after a certain period of mourning that will vary depending on the personality involved. For people who are just made to run their own business, it is a matter of necessity to try it again once they’ve gotten a taste of what it’s like. They may walk into the new venture with significantly less confidence than they did previously — a testimony to both their resilience and their courage — but they will give it another go.

“I was a little timid and skeptical,” says Ms. Campbell. “But, I had more knowledge on my side and experience with the legalities of a business.”

“It has taken me almost two years to even consider opening up another business, and I am going to take little baby steps and enjoy the process more,” says Elmer Vega, whose successful business crumbled when he made the mistake of opening a storefront.

As clichéd as it sounds, that first, failed business often acts as a learning experience that the business owner can use to enhance their chances of success the second time around. And that is pretty extraordinary when you stop to think about how devastating that failure can feel when it happens. Failure can be a great teacher.

The point here is not to try to frighten anybody. But it is important, as you begin your microbusiness adventure, to consider the possibility that you might not make it. There’s nothing inherently wrong with that. If it happens, it’s not proof that your Aunt Charlie was right and you should have gone out to find a “real” job.

I’m just suggesting that you think about it, so that you can avoid seeing it as a judgment on yourself as a business owner. If, instead of letting it convince you that you are unworthy, you can learn from your previous mistakes, then you have a much better chance of making a go of it the second (or third) time around.