Although starting a business is relatively simple, only a handful of entrepreneurs make it big on their initial business ventures—with most of them weathered a couple of failures. While over 80% of startups survive their first year, only half of them survive five years down the road. But what separates successful business owners from the rest? It’s their view that failures are merely opportunities to learn a valuable lesson.
However, business failures still provide harsh consequences, including financial hardships, damaged relationships, and low self-esteem. So, when your startup is failing, it’s time to make tough decisions.
Here are things you need to do when your startup fails.
Determine What Went Wrong
The first thing you need to do when you see your startup failing is to analyze your failure, figure out what went wrong, and determine the most significant contributing factors. You can begin by summarizing the trajectory of your business. Ask yourself, were you out of touch with your clients? Were your products or services unique? Did you communicate your values? That’s because those are common reasons why startups fail. So, ask yourself how much applies to your business.
Once you have a better idea of what went wrong, it can be easier to decide whether to change your original idea or start over from scratch.
Whether it’s a startup or enterprise, all businesses, no matter how bad, have some assets, cars, equipment, workplace, employees, and even intellectual property. If your home has been made collateral in one of your loans, consult with a foreclosure attorney to help you find a good alternative.
Even if your company isn’t making any money, you’re bound to have a client or two, consider them valuable assets and take advantage of them.
Get Finances in Order
A crucial aspect of dealing with business failures, make sure to get your finances in order. You’ll no longer be able to rely on your startup for your funding, and if you had a significant amount of personal savings tied up in your business, you might lose them in your failures. Even if you declare bankruptcy, you can still get back on track, and you need to spend time analyzing your expenses and figuring out a new revenue source.
Work with Others
When you experience failure, expose yourself to more entrepreneurs, whether attending more networking events and connecting with other aspiring business owners online or just introducing yourself to other entrepreneurs. Share personal experiences and ask about theirs. You’ll need to get new perspectives about things and collaborate with other professionals along the way.
Take Some ‘Me-Time’
Generally, entrepreneurship is demanding, with 25% of entrepreneurs logging 60 hours of work time or more every week. Losing your startup can be challenging, but it’s also a crucial opportunity to collect yourself and spend time doing what you want to do. You can do this whatever way you want, whether it’s going on a long trip or staying at home. De-stress, clear your thoughts enough to develop some new ideas, and prepare yourself to take on your next planned venture.
Prepare for the Next Venture
After finding financial stability and feeling confident that you’ve learned some crucial lessons about your failure, you’ll be ready to begin preparing for your next business venture. After a couple of months away from your previous business, you should be in an excellent position to decide whether to go back to entrepreneurship or go for a more traditional career pathway.
Whatever you choose, it’s best to branch out. Begin attending more networking events and talking to other individuals in your industry. In a conventional career path, leading you to a more profitable job opportunity, and in an entrepreneurial route, leading you to better investors or partners to succeed.
If you’re dedicated to becoming a business owner, no failure should prevent you from reaching for your dreams. Keep track of your ideas and consider the methods mentioned to cope and grow long-term—helping you achieve success over time.