Few successful entrepreneurs make it big on their first business venture. Most of them weathered a few failures. We all know Microsoft, but Bill Gates and Paul Allen's first venture was the Traf-O-Data, which sold just one unit before the business dissolved.
While most new businesses (80%) survive their first year, only half of them will still exist five years down the road. What separates successful entrepreneurs is their view that failures are merely opportunities to learn important lessons about businesses.
That's not to say failure is a walk in the park. Business failures often come with financial hardship, damaged relationships, and a strong challenge to your confidence. When your business is failing, it's time to make some tough decisions.
Here's what you need to do after experiencing business failure.
Figure Out What Went Wrong
Give your business a post-mortem as soon as you can stomach it. Analyze your failure, figure out why things went wrong, and determine the biggest contributing factors.
Start by summarizing the trajectory of the business. What did you want to accomplish when it started? What did you ultimately achieve? What did you create?
Were you out of touch with your customers? Was your product or service truly unique in the marketplace? Did you effectively communicate your value propositions? Those are some of the most common reasons why businesses fail, so ask yourself how any of them apply to your business.
Make sure to include any partners or employees in the post-mortem. You may have a crucial blind spot that led to the demise of the business. You'll need someone else to help you understand how and why those blind spots affected the business. It can help to bring in a neutral moderator to ensure this conversation stays civil.
Be balanced in your analysis. You don't want to dwell on your past failures, but if you don't pause to collect insights, you're bound to make the same mistakes again.
Once you have a clearer idea of what went wrong, it'll be easier to decide whether to tweak your original idea and start over, or whether you should scrap the whole project and start a new idea from scratch.
Decide Whether You Need a Full-Time Job
Before jumping into another costly business venture, you need to go through a self-evaluation to determine whether or not that's a reasonable (and responsible) decision. If you have a family that depends on your income or accrued a large amount of outstanding debt from your last venture, taking a steady full-time job may be the best course of action—at least for the immediate future.
Get Excited Again
Experiencing a business failure is an emotional blow to even the steeliest entrepreneurs, but you can't get stuck down in the dumps. Take this chance to reinvigorate your passion for entrepreneurship.
As you're giving your business its post-mortem, take note of any tasks that personally brought you joy and those that felt like a drag. Planning for how to maximize the joyful tasks and minimize the dragging ones can help you get genuinely excited to dive into your next business.
Mentors can help jumpstart this process. Listen to them talk about what gets them excited about their business, then share where you're at with your career. They'll likely have helpful business tips, along with some ideas for how to blow off steam and stay positive.
Embrace Your Failure
The only people who fail are the people who take risks, and you should be proud to count yourself part of that group. Don't allow failure to diminish your self-confidence or wipe out your lofty ambitions. You will have to take more risks if you want to truly succeed.
Author John Maxwell is credited with saying, "Fail early, fail fast, but always fail forward." His point is that failure is a blessing, so long as you embrace the lessons learned and keep progressing. Don't be ashamed of past failures or afraid to encounter future ones. Instead, celebrate the ride you took with your past business and look forward to all the adventures in store for the future!