CONFESSION: I HAVE started business which failed. OK, I’ve admitted it.
But you know what? It’s not the end of the world. It’s a natural part of the cycle of learning.
Yes, I realize that doesn’t alleviate the pain very much, especially as you’re going through the process. But you also can’t let the prospects of failure keep you from ever taking a risk.
How do we think through this?
When you’re starting up a new venture, or making a major decision, there’s always risk associated. But you need to compare that against the risk of continuing the present course. For example:
|Start my own business||Keep my current job|
|– Takes a lot of money
– Have to learn a lot of things
– A LOT of work
– Could (probably) fail
|– Security is unknown long term
– Limited potential for high income
– Won’t be learning a lot
– Frustration with certain people
|+ Opportunity to make more money
+ Will learn a lot
+ Control over my destiny (?)
|+ Know the people
+ Know the work
+ Short term security
When faced with this kind of decision, you’ll spend a lot of time looking at those things on the left. In order to make a balanced and informed decision, though, you have to honestly look at the alternative(s) – in this case the right side. Often, you’ll uncover risks which weren’t immediately apparent.
But we still have that big one there on the left: “Could (probably) fail.” How much fear does that generate for you? Is it intolerable, or do you have the means to mitigate that? Here’s what mitigation looks like:
- Don’t bet your entire life savings and family happiness on the venture. Keep some in reserve.
- Protect your personal assets from business liabilities by forming a corporation.
- Put milestones in place so that you can honestly assess whether the business is headed toward success or failure well before it happens.
- Be attentive, frugal, and conservative where it’s not required to take risks.
- Be honest with yourself, identify key areas of business risk and ask for help.
- Change business direction when necessary, but do it thoughtfully, not impulsively.
The idea of “pivoting your business” has gained much popularity of late, the concept being that it’s great to redirect your business when the market tells you that you need to change. There’s a fair bit of justified cynicism on the other side, though, from people who see this as an excuse for just winging it, wasting money, and avoid making a solid business plan.
The best answer is somewhere in between. Yes, create a solid business plan, and test to see if the market will indeed buy what you’re trying to sell. But when you’re out in front of the market, there’s significant risk that your plans won’t work and you have to adjust to reality.
So when you do, be thoughtful. Recognize the new situation, be critical, but move to a decision. And make sure you’re not just changing because you’ve gotten bored – that’s different than the market telling you that it has a better answer than what you were proposing.