From small product launch failures to an entire business shutting down, there are no easy failures.
No matter how well you prepare mentally for it, a business failure can be devastating. The toll it can take on your confidence, emotional health, and business bank account is not to be taken likely. We know that almost 50% of all new businesses will fail within the first 2 years.
That’s the bad news. The good news is overcoming and bouncing back from a business In this article, we’ll give you a few steps to help you bounce back.
How to Recover from a Business Failure
The first step is usually the most difficult. Especially if you had high hopes and dreams for your business. But recovering from a business failure means first accepting that the business has failed to live up to your expectations.
Dealing with any kind of loss is tough. And the more time, energy, and money was invested into your venture, the harder the loss is to take. But accepting that business failures are fairly common is one of the first steps towards getting back on your feet. Try to keep in mind that if your business fails, it’s not the end of the world. It is just the end of one venture.
2. Take a Break
If you’re able, step away and take some time for yourself. Running a business can take a lot out of a person. Entrepreneurship is usually so demanding that many entrepreneurs forgo taking time for themselves in order to put focus and energy into their businesses.
Even though you may have the drive and desire to get up and try again right away, taking a break from everything may be the best thing you can do. During your break, avoid trying to dwell on what has transpired with your failed business.
Take time to go on vacation, spend time with your friends and family, or just be alone. It will be tempting to rush back to work. But you need to allow yourself some recovering time from the stress that the business has put on your body and mind.
3. Reflect on the Root Cause
While taking some time off, it may help to reflect on the root cause of the business failure. There are many reasons why businesses fail. Sometimes the reasons are a direct result of leadership mistakes and missteps. Other times it is because of factors outside of the business’’ control
There may be many causes but if you are having trouble coming up with some, Let me get you started:
- Economy is not right for your business to thrive.
- Your level of expertise was not sufficient enough to carry the business.
- Lack of funding.
- Lack of demand for your product or service.
- Goals, target market, or the vision, were not clearly defined.
- You did not take full responsibility for the business.
For some other ideas that may have caused your business failure check out our article 6 Reasons Why Your Business is Failing
4. Ask Yourself “What Happened? and What Did I Learn?”
Honesty is key here.
There are so many situations that can lead to business failure if not taken care of. You need to analyze the situation that led to failure in the first place. The analysis here involves the whole situation from the business plan, the market, and finally to the start of the business.
If you find that the problem arose due to the business plan that was not well laid down, it’s time to get up and try again. For example, some of the fundamental things might have been omitted in the process and therefore need to be prefixed.
The most important thing in business is to learn from every step, every obstacle, and every challenge. Failure in business should implant some valuable lessons. The lessons learned from past mistakes are so significant in reconstructing the second step. Of course, learning is a continuous process that you can never exhaust.
It is imperative to keep on learning so that whenever something is going wrong in your current business, it becomes easier to fix it before it breaks down.
5. Remember What You did RIGHT
Earlier I mentioned that it was important to understand what areas you failed as a leader in your business. But now it’s time to focus on the things you did right.
Did your customers leave a lot of positive reviews? Did your team love working for you? Did you offer exceptional customer service? Even though you may have not been able to maintain the financial stability needed to grow a business, there may have been many other things that you want to take and apply to your next business.
6. Rebuild Your Hope
It is not healthy to obsess about your failure. As business owners, we tend to think and overthink things. This includes our failures and disappointments. During the process of recovering from a business failure, one of the last things you want to do is to dwell too long on the failure.
Instead, take some time to rebuild hope in the future. This can be done by understanding that failure is not final. You can start by familiarizing yourself with successful entrepreneurs who have failed before they succeeded. Doing this will help you see that recovery and success after a business failure is possible.
From there, you can begin to pursue the next venture or product launch. Begin to outline how things can go differently. Focus on the lessons learned from the previous failure and add them to the new possibilities ahead.
7. Press the “Reset” Button
Pressing the reset button means changing things and starting over. By doing this you will start the process of starting over. Pressing reset is a crucial step of overcoming a business failure because it offers you the opportunity to get a fresh start.
- Create a new business model-If your shortcomings were due to the way you intended your business to make money, try changing up your business model. Check out our list of the different types of business models.
- Build a new team-Sometimes shaking up your team can add new life into your business. Look for enthusiastic and skilled people that can help get you to where you were previously headed.
- Create new processes-Similar to building a new team, it is also a good idea to try a new way of operating the business. This includes re-evaluating your administration, sales, and marketing processes.
- Change the way you manage the financials-Take a look at how your business’s funds were managed in the past. Since cash management is vital for a successful business. It is important to look at how you are managing your business finance and try to implement different ways to increase profitability and minimize risk.
8. Pick Up the Pieces
Now is the time to take action. Overcoming a business failure includes managing the loss as well as putting the pieces back together. Putting things back into place will help you start over the right way.
Do what you can to manage any financial loss that was associated with the business or product failure. Discount and liquidate any inventory that may exist. Negotiate with any vendors or creditors to pay off any outstanding debts.
Also make sure to tie up any loose ends with remaining customers or clients. Do your best to maintain a positive relationship with your best customers and clients. If you’ve provided great service or an awesome product, they will be more than happy to do business with you again.
9. Set New Goals
Your previous business goal may have been out of line with the actions you were taking. They may have also not been in line with the type of business you have. When recovering from a business failure, you must set a goal that aligns with that business.
One thing that tends to derail some entrepreneurs is their obsession with metrics that don’t matter to your business. Perhaps you set a goal to get your brand out to the general public. You worked hard, threw a ton of marketing dollars into your campaign, and hired a social media expert to manage your accounts.
You may have 100,000 followers on Instagram, but does that translate into actual profits for the business? Next time, you may want to make the goal to be sales conversion instead of brand awareness.
10. Implement the New Ideas
The best way to move forward is to identify new ideas and implement them if they are viable. If you are to go back to your original business, you may need new ideas on how to improve on the services and this may lead to success. At this point, you have already identified what caused failure in your first business, and here, you have to put on new measures to ensure that your business is going to succeed this time around.
Also, at this point, you may have to consult entrepreneurs who have succeeded and learn from them. You can also find some business consultants, talk to them about your previous business, and let them give you some advice that can help restore your hope for success.
It’s not easy, but it is possible to completely recover from a business failure. Overcoming a business failure doesn’t happen overnight. Be patient, consistent, and forgiving of yourself. In time, you will be able to refocus, readjust, and retry your business dreams again.
This post was first published on May 23, 2016 but has been updated and expanding in February 2022