10 Startup Tips
Chapter 24: Facing Failure
Learn to accept failure
This may sound a little strange,
but being an entrepreneur is about dealing with failure
– an inevitable part of the creative process.
As the inventor of the filament light bulb Thomas Edison put it:
Of the 200 failed bulbs,
each failure gave me something to combine for the next attempt.
However, it seems to everyone,
failure is a bad word.
There are not many books about failure.
People see it as a contagious disease
that you get when you talk about it.
This is just like the army never teaches the soldiers how to withdraw.
There are times when failure is good for you
and for your business.
Hopefully those are just minor setbacks.
But then you will be able to solve the problem,
and move on,
that determines the success of your business.
Even Richard Branson,
before his huge success
with his brand and airline,
had to go through a lot of work,
including a student newspaper,
a mail-order store and at a planning clinic family.
But he kept going.
The greatest glory in life is not in never falling,
but in getting up every time you fall.
Should I give up?
“I started my business with great enthusiasm.
The first year was full of difficulties.
However, after two years in the business,
the work still has not progressed.
Should I give up?” (Christina)
It was the most moving letter I received from a reader.
Do not give up!
However, something is wrong with Christina’s business
and it’s time for her to take a look.
There are two types of “failure”.
1. It’s Time to Sacrifice the Sacrificial Cow
A Danish colleague told me,
“Sometimes you have to be prepared to sacrifice a scapegoat.”
You need to face the fact that no matter how much recovery,
effort and time you have poured in,
your business is not progressing
and is actually setting your business back.
At that point,
you have to make the decision to stop this activity
and focus on other activities.
The Shell story shows a company going from a “failed” small store
to the largest retail company in the world.
Similarly,
Tom Farmer started cleaning kitchen utensils in Edinburgh
and has since built a £1 billion business.
So if your business isn’t progressing,
you can change it
by bringing the same product to different customers;
Change the way you ship your goods by leasing,
or consulting,
rather than selling out the entire business.
Another example:
I started the business of publishing
and selling yearbooks.
It was fine,
but after about three years,
the profits increased slightly,
and the business was seasonal.
So we decided to diversify into a publishing company
and it grew pretty fast.
However…
Last year,
I found out that three young students in the US
It have started a yearbook business,
and they do it online.
Now they have received a buyout offer from Yahoo for $1 billion.
Diversification the Caspian way is like that.
2. When you feel like you’ve lost a lot of things
There are times when
even though you believe in the long-term success of your business,
it still seems to be going downhill.
Maybe one of your big clients goes bankrupt,
an employee moves on to a better job,
you get busted,
your competitor gets a great job,
and you get sick.
Taken individually,
these shouldn’t worry you too much.
But when you put them together,
little by little, the negative feedback starts
to form a huge stream of water from your self-esteem.
One morning you wake up and think,
“Let it go, this is not my game”
and consider giving up.
As Gill, a reader, wrote to me:
“Any advice on how I can stop the things that are draining me?”
This is not the time to give up,
but the time to have a cure for your motivation.
Read the next chapter.
The third type of business failure
The reality is that there is a third type of ‘failure’
that very few people are aware of
because it is disguised behind their success.
For one real example:
Derek ran the business for six years.
Although they made a profit,
they did not grow much in the last few years.
He works six days a week and late into the night.
Recently,
his employees moved to work for a competitor
and earned more than Derek could pay himself.
He couldn’t raise the price high
because he had a lot of competitors.
He doesn’t want to give up
because he has put too much effort into it
and no one will buy it
because he is the main driver of the business.
Derek doesn’t realize that
it’s not he who owns the business,
but the business that owns him.
A good book to read is E-Myth:
To Be an Effective Manager1 by Michael Gerber.
It explains how people spend more time doing “their business” rather than “their business”.
They need to give themselves space and time
to consider the structure of the business
and the way it operates,
not just work.
Although it hurts to accept
that your business isn’t making much progress
after all the efforts you’ve put in,
trying harder won’t change the situation.
Therefore, you must also consider the ‘opportunity cost’.
The cost you have to spend on the business
is the profit you can earn in another business.
The world would be boring
if Richard Branson was the only person known
as ‘Britain’s Top Student Newspaper Publisher’.