Failure is an inevitable part of startups. Even if your new innovative venture doesn’t fail, your expectations will undoubtedly clash with reality in one way or another.
This shouldn’t scare you. Innovation arises from theoretical ideas that are modified by the real world. To win at the start-up game, you will have to endure hundreds of (hopefully) small failures that will lead you to the right iterations and turns of direction (pivots) until you find the right formula that would give you oversized success.
Since failure is part of the game, you need a good plan to deal with it.
If you’re unprepared, the failure of a startup could almost ruin your entrepreneurial journey, especially on a personal level. However, if you learn to face failure with decency, it can be a source of professional growth and personal development.
1. Starting mistakes on a personal level
We could argue that failure affects you as a startup founder on two levels – personal and professional.
As the biggest stakeholder in your company, the failures in your own company affect you the most.
The sad truth is that many startup founders are divorced and unhappy. It is very difficult to maintain a healthy work-life balance when your new business requires your attention 24/7. And it’s even more difficult to justify the sacrifices required when you end up with nothing to show.
Make no mistake – being a successful startup founder is an extremely tough goal. Not everyone is at a point in their life that can afford the full dedication required to be successful. The time required and the extremely high emotional and financial volatility of a startup in the early stages, for example, do not fit well with a young family with young children.
Going all-in at a startup may be more suitable for entrepreneurs without a lot of responsibility (i.e. straight from college) or for older professionals who have built up enough stability and can take the risk with little drama (i.e. your children are older and You are financially wealthy).
In addition, you must avoid the land of the living dead at all costs: a situation where you have to contend with a barely living startup for an extended period of time. To do this, you need to learn to validate your ideas quickly and efficiently, and quickly discard those that are not promising.
2. Startup errors on a professional level
In most professions, a catastrophic failure can undermine your reputation and make professional growth difficult.
For startups, the opposite is true: the people who are experienced in this field know that failure is part of the game, and a person who shows the ability to handle failure gracefully can be an asset to any project.
The most important thing that enables you to do this is honest communication with your startup stakeholders:
- Investors: Be honest about the business and spend your investor money frugally and responsibly. Investors know you could lose their money, but the way you lose it will determine whether they are happy to invest in you more than once or whether they want to advertise you on their network. Good founders are just as valuable as good ideas.
- Customers: Try to avoid situations where you don’t keep your promises. This usually means keeping things simple at the beginning. Early adopters are flexible and are willing to forgive missteps when they clearly see good efforts and good intentions.
- Employees: Don’t be overwhelmed by hiring too many people too quickly. If your cash flows are volatile, it might be better to keep the in-house team small and outsource most of the work to freelancers and consulting firms. In this way you minimize the likelihood of having to downsize in difficult times. Building meaningful relationships with your employees is vital – even if this startup project is unsuccessful, you may want to work with them on your next project.
In summary, failure is to be expected. You need to plan for it and learn to deal with it that doesn’t leave burned bridges and hurt feelings behind your back.
- Do not get fully involved in a startup project at a time in your life when you cannot afford it.
- Communicate truthfully with all of your stakeholders. This way you build relationships instead of burning bridges. These relationships will be critical to your long-term success.