What to Do When Your Business Fails Miserably

What will you do if your business crashes and burns?

Businessman with face pressed against wall, profile, close-up
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Few successful entrepreneurs make it big on their first business venture. In fact, 830 of the world's 960 self-made billionaires made their money from multiple businesses.

Most of them weathered a few, sometimes miserable, failures before they made their first million dollars. Their eventual success is due to a proactive choice to never accept failure. The belief that any failure is merely a learning opportunity, and that these lessons would shape how they'd do business the next time around.

I'm no stranger to failure, either.

To an experienced outside observer, the trajectory of my first business was like watching a train wreck in slow motion.

I built a product based on untested assumptions, failed to validate the market appeal, didn't start working on a distribution & sales plan until I had already produced thousands of units, and seriously misjudged the price point consumers would be willing to pay.

All in all, I'd end up losing $6,537 after liquidating my excess inventory at deep discounts. However, the failure of my first business taught me some very impactful lessons that would go on to shape the person I'd become. It also made very clear to me, the decisions I'd have to make in the event of another business failure one day.

When your business fails, you're likely bringing with you some less than ideal financial conditions, potentially damaged relationships with friends or co-founders, and a very strong shake to your personal confidence.

It's heavy.

The bottom line is that it's now time to make some tough decisions. Here are the two main decisions you need to consciously make after experiencing business failure.

1. Do you immediately try again?

What'd you learn from your recent failure?

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? These are just a few of the most common reasons 80% of businesses fail in their first 18 months.

I spent dozens of hours analyzing where exactly I went wrong and figuring out what decisions I could've made differently along the road to failure, all with the goal of quickly internalizing what I could do better with my next business ventures.

Don't dwell on your past failures, but if you don't pause and thoughtfully collect insights, you're bound to make the same mistakes over again.

2. Do you focus on getting a full-time day job?

Before immediately jumping into another costly business venture, you need to go through a serious self-evaluation and determine whether or not that's a reasonable (and responsible) decision.

If you have a family that depends on your income, or a large amount of outstanding debt from your last venture, taking a steady full-time job with your new set of broad experience may be the best course of action for the immediate future.

It doesn't have to be forever; plenty of successful entrepreneurs have had pitstops working for someone else in between self-employment.

If your business fails, don't allow it to diminish your self-confidence or wipe out your lofty ambitions.

Take care of your responsibilities, learn from your mistakes, spend a little time decompressing, and start looking for your next business opportunity. Make it count.