Sometimes, despite our best attempts, we fail within our businesses.
Whether it’s a flopped product launch, or a downhill slope that eventually leads to closing up shop—there comes a point when you realize things just didn’t work out.
But in the face of failure, many business owners come out of the slump with a determination that helps them go above and beyond in their next project.
In fact, some of the greatest entrepreneurs we know today have been able to bounce back from a failure.
Colonel Sanders's fried chicken recipe was rejected a total of 1,009 times before a restaurant picked it up.
27 different publishers rejected Dr. Seuss’s first book.
So how can you survive the storm of a business failure? We’ll look at a few ways you can overcome the worst failure with stories from business owners who learned those lessons first hand.
Business Failure by Over-Expansion
One way businesses fail is by growing too quickly.
Think of it like juggling: If you keep adding more oranges into the mix—eventually you won't be able to keep all of them moving (and they come crashing down.)
Daniel Lubetzky, Founder of KIND Snacks, learned this lesson the hard way with his first food line, Moshe & Ali. While the brand started with a sun-dried tomato spread, quick expansion lead to many new spreads being added to the line that didn’t match the quality (or the brand’s initial focus on Mediterranean-inspired flavors.) As a result, sales suffered, and the brand shriveled up.
Business Failure by Location
Sometimes business failure comes as a result of being in the wrong place at the wrong time.
Especially for brick and mortar business owners—if the locals aren’t buying, you’re in trouble.
Katy Kassian suffered a business failure when she opened a cafe in a small community that wasn’t keen on outsiders. Aside from her 10 regular coffee drinkers, 95% of her business came from passersby from outside the community. The locals simply wouldn’t support her restaurant since she wasn’t from the area. She realized it was time to call it quits after two years...and was crushed.
Business Failure by Financing
Business owners who don’t take the bootstrapping avenue often find themselves in a sticky financial situation when things don’t go as planned.
They default on loans, rack up credit card debt, or let down investors.
Josh Meyer started a technology-based company with two business partners in a cash-poor situation. Using credit cards to finance their development costs, they racked up large bills (and were struggling to even buy groceries.) When it came time to launch, the partners ended up having to sell the technology for pennies on the dollar after realizing it would be far more expensive to launch than sell. Failure ensued.
Business Failure by Roadblocks
Failures can also arise quickly and unexpectedly—like when you get slammed with a lawsuit or are shut down by your platform.
John Rampton owned Organize.com, which sold many of its orders through the Amazon platform. The company was doing great. But later in 2014, it was shut off by Amazon.
With sites like Amazon, standards for outside sellers are high. If your approval rate or order fulfillment rate drops below their required percentage, you get a 30 day warning, and are booted if it's not fixed. Since his company relied on drop-shippers, much of the control was out of his hands. During the holiday season, one vendor ran out of product and didn’t let him know--which resulted in being kicked off the platform. Sales dropped off, and the business failed.
“It was through having my company go under, letting go a room full of people, and dealing with everything since I’ve become a better entrepreneur that can handle everything. Bouncing back from failure can be hard, but if you have a strong will, anything is possible.” –John Rampton
Business Failure is Not the End
As an entrepreneur, you need thick skin and a spirit that can't be diminished by one business failure. If you learn from your mistakes, you can use those experiences to become even stronger and smarter as a business owner in your next endeavor.
What tips do you have for business owners facing failure?