Many first-time business owners fail on the first go-around, and many of them who are persistent go on to found wildly successful businesses after their first business venture fails. The European Commission, in fact, notes that one of the problems of a second business start-up is the stigma that comes from having failed the first time around, but the Commission asserts that it’s vital for entrepreneurs to pick themselves up and try again. After all, your mistakes can be valuable when you learn from them! If you’re struggling to get back on your feet after a business failure, don’t let it keep you down for long. Instead, use these five tips to get back in the game as soon as you can:
1. Analyze your past mistakes and problems
One of the key things that sets second-time business owners apart from first- time entrepreneurs is that they’ve been around the block a time or two. Even if your last business only held on for a year or two, chances are that you’ve learned valuable lessons – especially from your mistakes. Before you launch a new business, take time to analyze and learn from the mistakes you’ve made and the problems you’ve had with your last business.
The key here is not to beat yourself up about the issues – especially since they probably weren’t all under your direct control – but to learn what you can and apply those lessons to your new business. Whether you had issues with funding, marketing, employees, or products, you have something to learn that will help you build a better business the next time around.
2. Come up with a new game plan
You may decide to open a business in the same general area as your last one, or you might give something completely new a try. Either way, you’ll obviously need to research your options and come up with a game plan. The great part about coming up with a new plan is that you’ve already written one business plan, and knowing what information you need and how to put it together is half the battle.
This time while you’re writing your business plan, you may want to consider adding in a section that talks about the issues you had with your last business and what you learned from those issues, especially if you’re concerned with finding funding for your business because of your last failure. Showing potential investors what you’ve learned and how you intend to apply it could be beneficial for your new business in the long run.
3. Be good to yourself
As you’re getting ready to start a second business, it will probably be easy to let the what-ifs and if-onlys run through your mind constantly. It’s important that you learn to shut this down, or you’ll never find the courage to strike out into business ownership again. If you need to, seek counseling from your local Small Business Administration office, or spend some time talking with an entrepreneur friend to work up your courage once again.
Starting a business is a big deal the first time around, but it can be even scarier after a failure. As you’re working on creating your business plan, be sure that you spend some time listening to your own self-talk so that you can see areas where you might be holding back or doubting yourself, and then work on fixing that problem as you work on putting together your new business.
4. Look carefully at your funding options
Funding can be a major problem for second-time-around entrepreneurs. According to the European Commission, about 15% of businesses in Europe close, and the United States Small Business Administration notes that only about 50% of new businesses in the US are still open after five years. Those statistics can be a little scary for investors. But, the Small Business Administration also notes that by mid-2010, venture capital investments were on the rise after a few years of being on the decline. The funding you need is out there; you just have to learn where to get it.
- Bank Loans: If your last business filed for bankruptcy, you may have a difficult time getting a traditional installment startup loan from a bank. However, it’s worth looking into, for sure. The Small Business Administration says that about 50% of the funding for most small business startups comes from such loans, and they can be a steady way to get money for your new startup.
- Business Credit Cards: Credit cards for small businesses can be slightly more flexible and also a bit easier to get if your credit isn’t perfect. The best business credit cards have good rates and rewards tailored for business customers. These are definitely worth checking out, especially if you need money for day-to-day cash flow and don’t need a huge influx of start-up cash right at the beginning.
- Crowdfunding: This type of funding is popular for businesses that are eco-friendly or that have a social component. Basically, you can get small donations from a variety of business investors – sometimes they’re investments that you pay back if your business succeeds, and sometimes they’re simply donations. There are tons of crowdfunding websites online that can help you gather start-up funds, and these can be a good option for many businesses.
- Personal Funds: Many business start-ups begin with an entrepreneur’s personal funds. If you don’t have any money right now, you might want to consider using your entrepreneurial skills for other businesses for a time while you save up money for starting your own business. At the very least, it’s a good idea to have some money in savings before beginning your next business venture.
5. Give yourself some breathing room
As mentioned above, if you don’t already have an emergency fund in place, now is the time to get one. Going into a new business start-up with no financial breathing room can be a huge mistake because it lays too much pressure on you to succeed from the start. Spend some time saving up three to six months’ worth of expenses before you launch into your new business start-up. Even if this means putting off your new business venture for a year or more, it will be worthwhile in the long run!
These five tips can help you get back on your feet again after a first business failure. Ashyia Hill from CreditDonkey says, everyone makes mistakes, and the best inventors and entrepreneurs of our time have gotten where they are by making loads of mistakes on the way there. Instead of letting your first failure get you down, get back on your feet again. You never know. Next time around, you could have the success of a lifetime.