No matter who you are, you will encounter setbacks in your career. No matter how diligent you are in business, things just don't always go according to plan. Your success or failure is often not determined by these setbacks, but by your response to them.
When you're losing money, in the middle of a bad deal or a negotiation gone wrong, or some other career disaster has struck, what do you do? How do you come out stronger rather than destroyed? As an entrepreneur, this path can often feel lonely—particularly in the midst of financial tribulation. But these trials don’t have to spell disaster. In fact, you can come back stronger than ever.
Here are my top tips.
5 Essential Rules to Recovering from Business Failures
Business failures can be big or small. One of the painful truths in entrepreneurship is that nearly half of all startups fail within the first five years. What we have to understand is that failure once, twice, or more times is not an indicator for your future success. Remember: so many of the titans of the business world failed, failed, and failed again in their pursuit of wealth and success.
We need not fear failure. Instead, we should fear our own inability to step out and try. With that said, how do you bounce back after a major business failure?
1) Focus and take stock.
In the midst of a business meltdown, seeing what is happening around you for what it really is can be a challenge. For an entrepreneur or executive, focus should always be at the forefront of your mind. When we lose focus, we make mistakes. If you find yourself in danger or in the aftermath, you must find that focus again. It will be easy to be overwhelmed. You'll likely want to ignore it or fixate on certain aspects of the situation.
However, your business demands your whole focus. You must take full stock of your situation: losses, resources, contacts, everything. What can you salvage? What can you not? You must be realistic about your situation and what must be done to neatly resolve it, one way or another.
2) Pinpoint the cause(s).
Moving forward, it is critical that you focus your efforts on pinpointing the root of these setbacks and failures. You would be surprised how many failed startups fail for all the same reasons! If you hope to succeed after your pitfalls, you have to know why you fell down in the first place. Look at the data. Analyze it. When you know what caused your downfall, you will be able to build better systems and businesses in the future based on your experience.
3) Evaluate your finances.
It's no shock that business failures take a financial toll. Before you can move forward with the recovery, you will have to check on your financial health. Your financial situation might be bruised but fine, or you might be dealing with some serious setbacks. Maybe you feel financially devastated.
No matter what, you need to know the true state of things. Talk to an accountant or even a lawyer and get things straightened out. You can then make a game plan to cover any debts and costs, recoup, and begin to build towards your next goal. Having clarity in your finances is crucial.
4) Regroup and replan.
Next, look ahead. While there is wisdom to glean from your mistakes, there is no need dwelling on them. Having the sense that you will always fail because of this instance will not help you move forward. Instead, be future-minded. Take what you have learned in analysis and administrative efforts and make it of use. Use this newfound wisdom to craft a new plan and a new business trajectory for yourself. That may be a new path entirely or it might mean correcting the old path.
Either way, pick yourself up and refuse to dwell on the failure.
5) Seek counsel.
Lastly, I recommend seeking counsel. While you don't necessarily want to seek too much advice from too many people, as this can muddy and confuse your vision, speaking to other entrepreneurs and executives who have experienced failure in their time can help you to see in a real way that it is not the end of the world. Picking back up is possible and one failure does not define your career, your wealth, or your success.
There is hope after failure. Don't let setbacks prevent you from achieving your full potential.
What have you learned from some of life's biggest setbacks? Let me know your takeaways in the comments.