Tag Archives: startup

Why Businesses Fail

Man with empty pockets

 

In a prior article I gave a few general reasons why businesses fail. Those reasons seem to be the common ones being bandied about by “experts” and pundits in the business community. They are also somewhat generic in nature.

Since then, I ran across a more in-depth study done by CB Insights that provides very specific reasons for business failures.

CB Insights took a seemingly unusual approach to finding the answers to why businesses fail—they directly asked a group of over 100 owners why their startup businesses failed. Continue reading Why Businesses Fail

When Failure is Imminent!

Sorry, We're Closed

A while back I posted an article titled “When is it Time to Call it Quits,” but, just picking a time to close your business is only a small part of the process of calling it quits.

Oh sure, if you had tried to run a small home or Internet business, and it just didn’t work out while it was still young, you could probably simply ignore it and let it die off without any fanfare.

But, if you had a more established business with customers, creditors, employees, investors, and the like, it is a completely different story. This is especially true if you intend to start another business (and if you are truly an entrepreneur—you will).

So, if failure is imminent, here are a few things to help you get through the failure so you can move on to your next new venture:

  1. Use Your Outside Counselors.In the article mentioned above we discussed the importance of using outside counselors when trying to decide whether of not to shut down your business… it is just as important to continue using them for advice and feedback when you are going through the process of closing.
  2. Share everything.Everyone involved with your business needs to know exactly what is going on, including employees, investors, lenders, your advisors, and, especially, your family. It would be devastating for your spouse to have a process server knock on the door and serve papers to them saying you were losing your house. Don’t hold anything back just waiting for the “surprises” to happen.
  3. Have an orderly shutdown.If you decide to shut down your business, try to make it as orderly as possible… don’t just live day-to-day while circumstances close your business for you. Make a list of all the things you need to do to shut down your business; from coordinating with your landlord and utility companies, to having a parking lot sale. Schedule your closing events and approach them like any other project you do.
  4. Never, Never say: “I failed.”Failure is an event, not a person. Your business failed—you did not fail. This is never an easy concept to grasp—our business is personal to us, but it is important to separate business from emotions, especially when shutting down your business.
  5. Start the next one.Any true entrepreneur will be preparing to start their next business while they are closing down the old one. To put this into perspective, think of this: “Most great people have attained their greatest success just one step beyond their greatest failure.”
    — Napolean Hill

Failure is not a popular subject in the business world… it is often dismissed as “insignificant” in the overall scope of things. Unfortunately, it is all too real, and most of us will be faced with failure in some form, whether it is in product development, services performed, or an entire business.

It is important to understand, that having a business fail is part of the entrepreneurial life. In fact, it is an important aspect of entrepreneurship.

Here is what Thomas J. Watson Sr. had to say about business failures: “If you want to increase your success rate, double your failure rate.” The point Watson was making here is that you must constantly be putting forth a concerted effort at entrepreneurship.

The important thing to remember is that failure is not fatal. More important, I believe the following sums up what is truly important in our lives when facing a failed business:

“I really don’t think life is about the I-could-have-beens. Life is only about the I-tried-to-do. I don’t mind the failure, but I can’t imagine that I’d forgive myself if I didn’t try.” —Nikki Giovanni (Grammy-nominated American Poet and Author)


Note: For a more in-depth presentation and checklist on the process of closing a business, read my online report on Closing a Business.


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Entrepreneurship–Only For the Young?

With more and more boomers joining the ranks of the unemployed—added to the growing number of retirees whose portfolios have diminished (or disappeared)—we see a large block of “older” people searching for work. Actually, many of this older group are looking to become entrepreneurs…to experience that nagging drive to start a business that they ignored when they were in a comfortable job, or had all the retirement money they thought they would ever need. But, what chance does this older group stand against the energetic, well-educated, and creative younger entrepreneur?

Well, quite good actually. Consider if you will, that Herb Kelleher was 40 when he started Southwest Airlines; Gary Burrell was 52 when he cofounded Garmin; Harlan Sanders was 65 when he started franchising KFC; and entrepreneur Mortimer Levitt’s last book was titled “96 And Too Busy to Die” (he wrote his first book “How to Start a Business Without Losing Your Shirt” when he was 75).

Not to discourage young entrepreneurs—they are the key to America’s business future—but entrepreneurship does not belong just to the young. The Ewing Marion Kauffman Foundation of Entrepreneurial Activity reports that there are twice as many business founders over 50 than there are under 25.

To be successful, an entrepreneur does not need to produce an earth shaking new product that will change the lives of mankind. Richard Branson did not invent a new product, he improved a process, and Fred Smith simply improved how packages were delivered. Just because you don’t invent a new high tech gadget does not mean you won’t be successful. You can certainly replicate businesses that are already successful (that’s what franchising is all about). Or, you can simply turn your dream into a successful business, like Fraser Doherty (SuperJam), or Justin Esch and Dave Lefkow (Bacon Salt). There are no limits to imagination.

So, there you are…anyone of any age can start a business based on whatever their dream is. Don’t be intimidated because you have never started a business—there is lots of help available…and never tell yourself you’re too old to start a business (or too young for that matter).