Made up of small teams, start-ups must invest on all fronts (management, sales, communication, marketing, etc.). Every year, entrepreneurs close their doors following difficulties leading to failure that is sometimes perceived as insurmountable. So how can we take advantage of failure to bounce back better and succeed in transforming it into success?
Recent economic tensions and rapid market changes have put more than one start-up in difficulty. For some, the slowdown in investments or the sudden change in uses has slowed down opportunities. A large number of companies had to look for agile solutions to navigate this turbulence and avoid closure.
But why do some start-ups go bankrupt?
The survival of start-ups is a subject of concern that regularly makes the headlines in the media, sometimes maintaining a climate of uncertainty. Very young and yet innovative, too many of them still have to file for bankruptcy. Of all start-ups, only 10% of them manage to make it past the first few years. If this figure sows concern, it is above all a reminder that managing a young company in the current context is hardly an easy task, that it cannot be improvised and that managers face multiple, highly complex challenges.
Among the most common causes of start-up bankruptcy, one of the first remains linked to a poorly chosen or poorly defined target, but also to a product or service that is certainly innovative, but which does not correspond to the real needs of the market or customer expectations. However, establishing a solid business model to anticipate consumer needs does not always seem to be the priority of certain managers, who sometimes prefer to focus on solving secondary problems and drown in details.
Many companies promote innovations that are technically very efficient, but which do not sufficiently interest buyers or do not correspond to their purchasing power. For others, failure comes from a faulty cash flow plan, a poor marketing strategy or management errors. It also happens that the breakup comes from an inadequacy within the team or disagreements between partners. As we can see, the reasons for failure can be cumulative, one leading to the other. Creating a business involves mastering all the pillars of the activity and structuring a flawless strategy. Faced with failure, rigorously analyzing each weak link allows you to bounce back without making the same mistakes again.
The lifespan of start-ups is lengthening, but failures persist
In recent years, the life expectancy of start-ups has generally increased thanks to better support, promising increased sustainability for more structures. In the United States, one in two start-ups still close before their first anniversary. Conversely, in France, the trend remains rather encouraging: around 60% of start-ups in France manage to reach at least four years of experience.
If this figure remains moderate, the overall lifespan tends to extend. This stability can nevertheless be weakened at any time by economic hazards. Failure continues to frighten many entrepreneurs who view the entrepreneurial adventure as a trajectory with no room for error. Worried about having to stop their activity, they don’t always imagine being able to bounce back or overcome their missteps, even though failure above all constitutes an invaluable source of experience.
Fear of failure
For many founders, contemplating failure causes deep apprehension. The fear of failure often generates much more anxiety than the failure itself. To successfully apprehend it if it arises, it is better to learn to tame this fear. Accepting that failure is part of the journey allows you to question yourself, gain lucidity and better manage your emotions in order to bounce back more effectively.
Developing a business is never a smooth ride. No one has ever built a perfect organization without going through ups and downs. Berkeley professor of entrepreneurship, Mark Coopersmith, points out that to transform failure into success, it is beneficial to draw inspiration from the scientific approach. In science, when an experiment does not produce the expected result, researchers simply see it as an inconclusive result that needs to be analyzed in order to find the right solution. Mark Coopersmith’s metaphor therefore invites us to play down failure by assimilating it to an inconclusive test to continue looking for a favorable outcome.
See failure as an experience
As an entrepreneur, you will be confronted along the way with obstacles and setbacks that are an integral part of business life, and for which you must prepare. It is essential to no longer allow yourself to be paralyzed by the fear of making a mistake, but to develop the resilience necessary to experience it as a learning stage. Maintaining self-control in these pivotal moments helps you get back up faster and stronger.
Not all initiatives meet with immediate success, but they directly contribute to your personal construction and that of your project. Even if these phases remain trying, they make you more capable of handling crisis situations and managing the complexities of everyday life. You thus develop real managerial know-how.
Scientists, after an unexpected result, review their entire protocol to understand what needs to be adjusted. Don’t necessarily wait until you suffer a major setback to ask yourself the right questions or question your certainties. Whatever happens, these analysis steps will help you progress.
Failure and resilience are at the heart of entrepreneurial thinking today. If certain start-ups manage to establish themselves over the long term, it is thanks to a well-thought-out strategy, but also because their leaders know how to regularly question themselves and transform their past difficulties into real springboards.
