When Failure is Good for Business
Anyone who says they haven’t failed at something is lying. Or superhuman.
Failure is always seen as a negative in business, but are there times when it can actually work to your advantage?
You Can’t Make an Omelette Without Breaking a Few Eggs
Failure is an important part of business.
Half of all UK businesses fail within the first 5 years,. So why are we so reluctant to admit failure?
Pretending the risks aren’t there is folly. Rather than trying to avoid failure, maybe we should be more concerned with how to fail.
How to Fail Better and Succeed Sooner
Before starting any business, it goes without saying you’ll get advice and invite others to cross-examine your plans. Only once you’ve done your homework, thoroughly developed your business plan, and identified the competition should you start to think about spending money and seeking investment.
Sometimes, at this early stage, it can be hard to let go of an idea but if it becomes apparent that you can’t convince others of your plans then you might need to ask yourself why, and consider abandoning or adapting your plans.
While resilience is important in business, knowing when to stop and call it a day can be just as crucial.
For example, sometimes, for whatever reason, your concept might not catch on. There is no shame in admitting that and future investors will forgive such a failure. What they’ve less likely to forgive is mismanagement, operational issues, and bad legal or financial planning.
Failure is experience. If you haven’t failed at something then you haven’t tried. So, talking to investors about what you’ve learned instils confidence and raises your credibility.
Businesses that Turned Failure into Success
The stock market has a short memory and we often forget that today’s successes were yesterday’s failures.
Here are three businesses that were written off and turned their failure into success:
You might have heard of them. But did you know that back in the 1990s they were dubbed the “Amazon.bomb” by investors?
Back then Amazon was on the ropes; Walmart had resources it did not, Amazon had lots of expensive bricks and mortar, and eBooks were threatening to undermine Amazon’s original book selling business.
But, by changing their business model and adapting to the changing face of retail they turned a failing business into one of the most successful in the world.
Back in 2008, Airbnb was struggling to find investors and had to take extreme financial measures to stay afloat, such as making special edition cereal boxes for the Presidential candidates of the moment; Obama and McCain.
But they started small, self-funded and persevered; taking an original idea to rent air beds and turning it into a multi-billion dollar business.
In the beginning Apple was a promising young company, creating unique and ground-breaking products. However, over the course of 12 years its popularity and the departure of Steve Jobs in 1985 meant the company started to nose-dive towards bankruptcy.
By the time Steve Jobs was rehired in 1997 things were looking bleak. Jobs took the bull by the horns and began the task of a major restructure, forming a partnership with its competitor, Microsoft. As Jobs explained: "If we want to move forward…we have to let go of this notion that for Apple to win, Microsoft has to lose.”
Never has a complete U-turn in thinking led to such a dramatic success story in business.
Failure is Real
Every day businesses are faced with new challenges, uncertainties and problems. Sometimes they’ll respond in the right way - but because real life isn’t always predictable - sometimes they won’t.
The best failures are the ones that aren’t significant enough to sink the business, but are important enough to learn from and lead to significant changes going forward.
Successful businesses are the ones that are able to identify and ‘fix’ failures quickly and use this learning to adapt and evolve.
Have any of the businesses you’ve worked for failed at something? How did they manage to turn things around? We’d love to hear from you.
Email us your thoughts.
Photo by Marco Secchi on Unsplash.