Did you know that about half of all startups in the U.S. fail within five years? That is right, the chances that a business will succeed long term is not that high. According to the Bureau of Labor Statistics’ Business Employment Dynamics, about 80 percent of businesses with employees survive in the first year, 66 percent on the second year, 50 percent, after the fifth year, and finally, just 30 percent of businesses will survive 10 years.
If you see these numbers while you are thinking of starting your own business, it might just be enough to discourage you. After all, if the chances of failure are that high, why start your own business in the first place?
Well, there is no definitive answer to that but what you should know is that most entrepreneurs are aware that there is always the possibility of failure. They may not be familiar with the numbers above but they know that they are taking a risk by going into business.
And that is exactly what you need to learn if you want to start your own company. Failure is something you will probably encounter, more than once. You have to realize that the numbers above are just that, numbers. And while failures are setbacks, it is not the end of your entrepreneurial journey. Just ask these guys:
- Bill Gates – We all know him as the founder of Microsoft and co-creator of Windows. What most do not remember is that he started with a now defunct company called Traf-O-Data, which created reports for engineers, before finding success.
- Colonel Sanders – Before conquering the world with his finger-lickin’ good fried chicken, the Colonel faced 1000 rejections from people who probably regret their decision now. KFC now has thousands of branches worldwide.
- Vlad Shmunis – RingCentral is now known as the industry-leader in cloud-based communications solutions, but not many people know that Shmunis originally had his award-winning phone system in Windows form. It did not work out and he had to sell the company before buying it back later on and moving it to the cloud.
- Rowland Macy – It took him 12 years of failing to set up four dry good stores before finally opening Macy’s department store in New York. Shows that your original idea should be flexible to change right?
All of these popular successful people had one thing in common, they all faced failures but came out of it stronger and they eventually found success. It’s that simple! Or is it?
The road to success is paved with entrepreneurs who failed and never recovered from their failures and never tasted success. So, what makes these people different? What helped them turn failure into success?
Here are some of the answers:
They learn from their failures
A good entrepreneur will look at failure not as the end but as a learning opportunity. Instead of sulking, the first step to recovery is to review the business moves made and determine the reason, or reasons, why the business failed. For example, you might have focused too much on optimizing your price point that you forgot or did not put as much attention on other things your market is looking for, especially with today’s dominant market, the Millennials, putting more importance in sustainability than savings.
From there, you can take measures that will make sure the same mistakes will not be made again. Taking from the example above, you can now look at measures you can take to go green and promote sustainability through your product or service.
They never lose sight of their own strength
While it is important that you learn from your mistakes that lead to failure, you also have to recognize the things that you did right. Taking from the example above, even if you failed to take into consideration that sustainability is a factor for the Millennial market, you were still able to optimize the price of your product or service. That is a plus because not a lot of people are able to determine the best price point for their product or service.
Combine the lessons you learned by putting more emphasis to sustainability with your strength at determining the optimum price, and you have a business strategy that has a higher chance of succeeding.
Their product or service is flexible to change
If you look at some of the popular entrepreneurs above, you will see that it was not always their original product or service that brought them success. Bill Gates shifted from reports creation to developing the top office software and operating system in the world, Vlad Shmunis shifted the platform of his phone system from Windows to the cloud, and Rowland Macy failed at establishing a dry goods store before launching his now famous department store.
This shows that they recognized that their original product or service is not really working, and they decided that they can either make some adjustments to it, or come up with a new product or service altogether.
If you look at the numbers from the Bureau of Labor Statistics mentioned earlier, the percentage of businesses that fail are higher the longer the years. This means that some businesses actually did well the first few years before eventually failing too.
One of the possible reasons for those eventual failures is that they were not able to adjust to changes. Some entrepreneurs can be stubborn about their product or service especially if it had some taste of success. But as they say, nothing in this world is permanent except for change. What works right now might not necessarily work in the future.
If you want continued and sustainable success, you need to be able to adapt and adjust to changes and new challenges.
Entrepreneurship is not easy and you will encounter failure, big and small, along your journey. It is how you react to failure that will ultimately determine your success.