Entrepreneurship is difficult and as statistics show, not everybody who sets out to run a business succeeds. There are countless stories of those who have failed many times before they have become successful – including a fascinating report by smallbiztrends.com of 21 international entrepreneurs who failed big before becoming a success.
More prominently, Richard Branson is well known for his share of mistakes and wrong turns that led him to start over 100 businesses during the course of his now, very successful career at Virgin Group. CNBC.com recently reported that he, along with other entrepreneurial greats, all agree that failure is an important life lesson that makes you better.
In fact, 90% of start-ups fail, according to entrepreneur.com – and some of the reasons why are completely avoidable. Locally, SME South Africa reports on some of the more recognised entrepreneurs including Miles Kubheka of Vuyo’s Restaurant Chain, Jannie Mouton of PSG Group, Raymond Ackerman of Pick n Pay and John Sanei of Primi Piatti Restaurants, that tend to concur that the more you fail, the more your chance of success increases.
According to Donna Rachelson, CEO of Seed Engine, ‘the majority of business owners in South Africa are failing because it is very simply, a key characteristic of entrepreneurship. Rachelson runs the longest standing entrepreneurial survey in the country, known as ‘The Real State of Entrepreneurship,’ which reviews the South African business landscape on an annual basis. In the survey’s latest results, it highlights just how slowly entrepreneurs are failing and because of this, how poor their resilience is when it comes to adapting, improving and ultimately, tailoring their business for success.
‘In South Africa, we tend to have a mind-set that failure is bad and in many cases, entrepreneurs will carry on attempting to make their businesses work, even if the fundamentals are flawed and there is little chance of success. One of the hardest lessons to learn as an entrepreneur is when to ‘let go’. A business generally takes far longer and requires much more money to get off the ground than you can predict and you need to be able to recognise that critical point at which you determine whether it’s actually going to succeed or not. The more you put this into practice, the quicker you will move forward and succeed,’ says Rachelson.
Rachelson refers to this as ‘failing fast’ and ‘failing forward’ and encourages entrepreneurs running out of funds and resources to be honest with themselves about where they are in the business and whether it is better to keep going or rather take their key learnings in a time of failure and create something new – something better. This, she says, is one of the hardest things for a business owner to do and has the following advice for failing fast – ‘Get an outside opinion to give yourself perspective on where you are and where you need to be. Set yourself timelines and milestones and take action when you are not reaching them. Acknowledge when you might be too close or emotionally attached to your business idea and recognise when it is okay to let go. Most importantly, if you are going to ‘fail forward,’ you need to take the time to really understand what went wrong, in as much depth as you can. Keep asking yourself ‘why’ – only then can you honestly reflect on what you could have done differently and how you can employ this in your next venture.
If you are struggling to identify what the cause of your failure is, consider attending a local F*uck Up Night – a event series that’s part of a global movement designed to share the stories of a handful of people just like you, who have been through professional failure and come out the other side stronger – or reading through their Global Failure Index that geo-locates businesses that have failed and the reasons why.
Rachelson expands on this by saying that ‘we need to embed a culture of entrepreneurship where failure is seen as part of the journey and an opportunity to learn. This will make it easier for business owners to take risks and be open to them not working out. We also need to create a culture of transparency where failures in entrepreneurial development programmes are openly shared. Enterprise Supplier Development providers have an integral role to play here, helping new, black-owned SMMEs to understand their downfalls and providing them with the support and skills they need to grow into more sustainable entities that can meaningfully contribute towards economic growth and job creation. It is these honest conversations, rather than passing them from one incubator to the next, that will help business owners learn quicker and improve faster in the entrepreneurial ecosystem.’
‘In fact, I would even go so far as to say that this would help them to attract investors sooner too. Venture capitalists, especially abroad, view failure as one of an entrepreneur’s most valuable assets because it has taught them to watch for their mistakes, continuously find ways to be better and to always be prepared for fight.’
A report on inc.com backs this up by stating that in the past, investors only wanted to fund entrepreneurs with a proven track record but are now becoming keenly aware of the virtues and values of those who have made professional errors – and that one of their most critical tasks nowadays is to evaluate whether a business owner’s previous failures are due to a lack of experience or a lack of talent. Ultimately, the difference between these will determine the potential for long-term success.
If you are asking yourself where you fall on this spectrum, consider qz.com’s view on the ‘dark night’ rite of passage – something that all entrepreneurs go through but very few talk about, except for those brave front runners who share their experience at events like Fail Con. And then consider joining them in studying their failures, as well as your own.
This is how you fail forward and build something bigger next time – faster.
For more on Donna Rachelson, visit www.donnarachelson.com. Donna is a driven entrepreneur with a passion for helping women and entrepreneurs to make their mark. As an active advocate for diversity, she drives her agenda through the books she has authored, the keynote presentations she delivers, the media opinions she provides and the ecosystem lobbying she spearheads. In her current role as CEO and shareholder of Seed Engine, which includes Seed Academy and the WDB Growth Fund, she focuses on social impact and creating economic inclusion through entrepreneurship. Seed Engine builds the skills and capacity of youth and women entrepreneurs and supports them to grow and scale their businesses through high impact business development support, access to markets and funding. Visit Seed Engine at www.seedengine.co.za.