The Business Failed, But Did You?
by Tim Knox
Published on this site: July 11th, 2005 - See
more articles from this month...
Q: After years of dreaming about starting my own business,
I finally took the plunge a little over a year ago. To say
the least, my dream quickly became a nightmare. The business
didn't do nearly as well as I had hoped. I ran out of money
within six months and had to take out a second mortgage on
my house just to keep things going. I have now closed the
business and am left with a pile of bills that will probably
put me in personal bankruptcy. I don't mean to take it out
on you, but instead of telling people how great having your
own business is all the time you should also warn them that
starting a business is not easy and can be devastating when
things go wrong. -- Gene K.
A: Gene, I hope that I have never given anyone the
impression that having your own business is a walk in the
park. To the contrary, I'm like the proverbial Chicken Little
when it comes to warning readers of the obstacles and pitfalls
that await those considering the entrepreneurial plunge.
To quote myself from a column I wrote earlier this year,
"If it was easy, my friend, everybody would do it."
Just to make sure we're in agreement, let me reiterate the
standard warnings once again. Starting a business is incredibly
hard work. It takes long hours and deep pockets. It demands
unbridled passion and unquestioned commitment. It requires
that you give of yourself until you often feel there is nothing
left to give. And sometimes, even after you've done all that
you can do and given all that you can give, the business fails.
Period.
Blood, sweat, and tears can only carry you so far in the
business world. Good intentions and grand ideas won't pay
the office rent. You can not make payroll with Monopoly money.
I certainly don't mean to make light of your situation. In
fact, I know exactly how you feel. I failed so miserably my
first time in business that I swore I would never think about
working for myself again. All I wanted to do was to find a
nice, secure 9-to-5 job that provided me with a nice steady
paycheck. I yearned for the opportunity to grow fat and happy
on someone else's payroll for a change.
I never again wanted to have to think about customers or
employees or withholding taxes or accounts receivable or anything
else even remotely associated with being in business.
I just wanted to crawl in a hole and die because my business
had failed, and in my All-American, macho male, "you
are what you do" brain that meant that I was a failure,
too.
Getting over the failure of a business can be extremely difficult,
especially if you are one of those entrepreneurs (like I was)
who wrongly relates the success or failure of a business to
the success or failure of you as a person.
The best way that I know of to get over the failure of a
business (and the deep feelings of personal failure that go
along with it) is to do an autopsy of the business to help
find out exactly what went wrong. Only by discovering our
weakness can we build on our strengths (Yogi Berra eat your
heart out).
It took a long time and an enormous amount of reflection
to realize that the business had failed for many reasons,
not simply because I was a miserable excuse for an entrepreneur.
I wasn't looking to shuck the blame so much as simply trying
to understand what really went wrong. A few years later when
I mustered the courage to take the plunge again, I did so
with the knowledge gained from my first failed business. I
knew what I had done wrong and I knew what I'd done right.
Lessons learned, put to good use. Knock wood, this time so
far, so good.
Performing an autopsy on a failed business is a simple process,
but one that can reveal a wealth of information that you can
use should you ever decide to step out onto the business high
wire again.
To do your business autopsy find a quiet place where you
can sit and reflect on the life of your business. With pen
and paper in hand (or laptop on lap) write down everything
that you can think of that went right with the business and
alternatively, everything that went wrong. Your goal is to
create a "Success" versus "Failure" spreadsheet
that will help you better understand exactly why the business
went south.
For the autopsy to be effective, it is imperative that you
are completely honest with yourself. Shove your ego in a drawer
and be completely realistic or the autopsy will just become
an exercise in futility. You will end up looking for scapegoats
instead of reasons.
If your lack of experience was a contributing factor to the
failure of the business, write it down. If your brilliant
negotiating skills allowed you to close a big deal and beat
out a competitor, write it down. If you were undercapitalized
or incorrectly estimated your share of the market, write it
down. If you had a partner who didn't pull his weight or a
product that didn't sell as well as you thought it would or
your building was flattened by an earthquake, write it down.
Write it all down.
Once you have all the facts in front of you, it's easy to
see why the business really failed. You might be surprised
to find out that the failure of the business wasn't completely
your fault, after all.
Then again, you might discover that the business failure
was your fault. If that turns out to be the case, don't beat
yourself up for long. Not everyone is cut out to be an entrepreneur
and that's OK.
The world would be a miserable place if everyone sat around
whining about their lack of customers or complaining about
their employees.
Next time we'll take a look at the primary reasons businesses
fail and discuss how you might avoid them.
Here's to your success.
Tim Knox
Small Business Q&A is written by veteran entrepreneur
and syndicated columnist, Tim Knox. Tim serves as the
president and CEO of three successful technology companies
and is the founder of DropshipWholesale.net, an online organization
dedicated to the success of online and eBay entrepreneurs.
Tim's latest book is "The 30 Day Blueprint For Success!"
We asked 58 Top Internet Money Makers: If you lost is all
tomorrow and had to start from scratch, what would you do
to be back on top in the 30 days? Their answers just might
make you rich! Related Links: http://www.prosperityandprofits.com
http://www.smallbusinessqa.com
http://www.dropshipwholesale.net
http://www.30dayblueprint.com
http://www.timknox.com
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