uccess has many fathers but Failure is an Orphan.
And in the mean world of business, failures are not rewarded.
They are looked down and Frowned upon.
“The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail.”
According to U.S. Census data, only 48.8 percent of the new establishments started between 1977 and 2000 were alive at age five.” This is for small businesses. The failure rate is much worse than for “startups”.
The irony in the above statement is. They do not even have a number for failures in startups.
They have left us to our imagination. We have to figure out the failure rate in “startups”.
Entrepreneurs and Failures:
Failures are quite common in startups.
An entrepreneur might fail in raising funds. Delivering work. Making sales. Keeping employees happy. Managing a work – social balance. Returning money to investors.
Worse. Fail the startup.
I know all the above sound very common to all the businesses or any salaried person.
So why am I focussing only on entrepreneurs in startups?
Entrepreneurs in startups are always hanging by a thin wire.
They are low on funds (bootstrapped startups). Are trying something new and are under tremendous pressure to succeed and are always trying to win a losing battle.
The “pressure” is nothing in comparison to what a normal business owner or a salaried person might feel.
I recently met a person who had failed in many ventures before making a comeback by succeeding with his latest venture.
He said “There came a time i was gutted. The only thought which would always be rotating in my mind is that I am a failure in life. I have failed my business, my family and everyone who trusted me. ”
Last year when my startup rankmyleader failed, I was devastated.
It was not the first time one of my venture had failed. What made the failure “impactful” was the attachment I had with the idea.
I had worked on the idea for 5 to 6 months and was quite confident to see it through.
Simple mistakes like Overestimation of the idea. No revenue model. Outsourcing issues failed the startup.
Why makes failures so dangerous?
The “uncertainty” factor is an evil devil in your mind.
The devil starts playing tricky games after you fail. You might as well go crazy thinking
I have asked the question myself hundreds of times since I started my first venture.
Every time I failed, the question popped up.
A few years back, we were on the verge of closing our IT Company.
We had a good paying client, who was willing to work with us long term. All plans were made.
I invested in a new office.
Out of nowhere came the news, the client did not want to work with us.
Surprise! How could I have it so easy?
The project we were working on was given to us by a relative of a friend.
The “sweet NRI” relative promised to act as a facilitator between the client. He was to smoothen the project’s delivery and payment process.
When client started increasing requirements, we asked for an increase in budget.
Client refused to pay a penny more than what was agreed.
I shared my payment sheet with him.
To our surprise, 50% of the money he paid to his good friend had disappeared in between.
We were a new company working at very affordable rates.
The middleman (relative) quoted double the amount we quoted him to his friend (our client).
They both confronted each other.
The middleman accepted his mistake and agreed to his mistake.
He paid back the money he kept in between. The client was pissed with Indians (at least, this is what he told me) and refused to honour the contract.
Within a day, I was down by an amount based on which we had made projections for future.
The new office’s rent was peeping into my pocket.
The pocket had only money to sustain the next few months in the new swanky office.
The element of uncertainty had hit. The detractors who always hated me for starting on my own were out with “I told you” written all over their face.
I went and spoke to our landlord, who was not too interested in listening to a failed entrepreneur.
He had his interests to protect.
I had shifted in office 3 to 4 months back. Now I wanted to move out, as I didn’t have money to pay after 1-2 months.
I convinced him to find another tenant.
He said I will have to pay the rent until he gets another tenant in my two months of notice.
I had to ask most of my staff to leave. They were wonderful developers, who slogged late nights with me in office to make the opportunity a success.
When I look back, I can still see the sadness on their face.
I had failed them. One of them had been with us since we started.
It was a big loss.
I could not go back to the family. (ego issues).
I could not ask friends for help (prestige issue)
I could not ask bank for loans (do they give loans on balance sheets?)
I was left to fend for myself.
I had witnessed failures earlier too but this one was a major blow.
After I left my office space, I walked towards my car.
The question I avoided the most was making all the wrong noises in my head.
“What next?” was back. The element of uncertainty had crept in.
What if you cannot earn for your family?
What if you have to go back to the job?
What if you have to ask your dad for help?
What if you are just another failure?
Your mind starts playing the mind games in the weirdest of ways.
And just when you think your mind has played enough mind games with you. You have your long extended family asking you more stupid questions.
How can your failure go unnoticed, when you stay in India.
Here is how they make the experience more painful. (believe me, they do their bit in chastening you after your failures).
I always make it a point to discuss my concepts with everyone I know.
I like to gauge public opinion before trying something new.
Most of the times, the exercise has helped me in getting some real-time feedback from end users but this time, the exercise backfired.
I had invested some of my savings in a political website Rank My Leader.
My family had a fair idea of what I was doing.
So when the venture failed, there was nowhere to take cover.
In India, we do not take lightly to failures.
We have been taught to never fail.
Failure is frowned upon in India. You are a loser, who took the stupid risk of investing in a venture when you could have easily invested the money in “gold” “real estate” or “FD”.
Why the hell did you take the risk?
When the venture failed, I went into hiding.
I knew everyone I had pitched the idea to will ask “what happened to your dream venture?”
The news of our IT Company struggling was also no secret. Which made matters worse for me.
A few days back, when I discussed my blog with one of “the elders of the family”.
His snapped at me “why don’t you invest your time and energy in something which makes money?”
My last failure literally led to a lasting impact on our family 🙂
So how should Entrepreneurs cope with failure?
The first time I failed in a venture, I was 26. My father was the cushion to protect me from failures.
He always made it a point to look after me since I started my venture in our hometown.
He was encouraging. Without him, I wouldn’t have survived my first year in my venture.
The second time I failed (the experience I had shared earlier), I was alone.
I had shifted to a new city. There was no one I could speak to (other than my wife, who too had been disillusioned by now of my big talks of making it large were proving “big blahs”).
I avoided her too. So I was on my own.
There was nowhere to find solace. Nowhere in the world do they teach you how to handle failures. Coping with failure is something we entrepreneurs have to learn as we learn from our experience.
Here is how I overcame my biggest failure.
After giving my notice to the landlord. I started looking for a smaller place to accommodate 4 to 5 people.
I found an office (a very small space) on the 3rd floor of a building at the fraction of the rent of the last office.
I did sell some furniture to get some money.
The last landlord soon found a new company to rent his premises (Gods smiled on me).
He was kind enough to return my complete security amount.
I used the money to cover the first month’s rent. Two month’s security and get some basic renovation done in our new office.
It was a new beginning.
I dug into my savings to pay some of the past guys.
To others, I promised to repay them in the next few months.
They were nice guys, who understood what I was going through.
We started again.
Since failure was not an option. I worked harder than before.
Within a year, we were back on our feet.
We expanded the existing office space to cover half of the open space.
I found a new co-founder.
The next time I failed, I was prepared.
I knew I was taking a gamble but it was not as catastrophic as the previous failure.
Tips for Entrepreneurs to handle failure :
· Always remember “Failures are not the end of the world”
Do not give too much importance to the mind games your mind plays.
Do not give too much importance to what your relatives say.
A failure like success is a phase.
Spend some time analyzing why you failed.
Get back on your feet.
Start again and do not repeat the mistakes which led to your failure.
· Stay Positive and confident
The adverse times are not easy.
You are against all odds.
I have seen worse of times but one quality which has helped me endure and sail through tough times is my confidence in myself.
I might sound like someone who is unnecessarily boasting about himself but believe me, I do not give up so easily.
I have never doubted myself.
Other can only support you.
They cannot give you back your confidence.
You have to trust yourself.
· Trust your backup plan
I am old now (if 35 is old 🙂 ). I call myself old because I take calculated risks. A trait very much associated with mature, old business person in our country.
There was a time when I was always willing to try “aar ya paar” strategy.
Now I try to keep a backup so that I do not end up on the road.
So I have started taking calculated risks. I know when to stop.
· Recall your past successes:
Whenever I fail. I look back at my past successes.
I recall how we cracked that tough “deal” or how we survived the cash crunch or how we overcame adversity to deliver a project.
Recall your past successes. There is no reason, why you cannot repeat your past success.
And when all else fails “be prepared to go back to the job”.
Time to puncture your inflated ego. You will not belittle yourself by looking for a job.
There are so many entrepreneurs who go back to a job.
The startup space is not cut out for everyone.
You tried your best. Your startup failed.
Don’t make a big deal out of the failure.
Probably you started your startup for all the wrong reasons.
Move on. You can anytime come back and start again.