Learning to fail
When you start in business you imagine a tough time to begin with, long hours, not too much reward, meetings with bank managers, lawyers, accountants and hopefully business development meetings with clients, then after a relatively short time you think you’ll establish a level of turnover that you’re happy with and life will start to gradually calm down.
Life doesn’t always turn out the way it was supposed to, and anyway doesn’t that sound a little boring?
For a start that level of turnover you thought you’d be happy with is a very moveable feast, as your turnover increases so do your outgoings, and trying to keep a lid on costs becomes tricky when a business is growing.
Then you find you need to employ people, and the ever increasing burden of compliance and HMRC raises it’s head. Just as you establish a nice level of business your first brick wall arrives. Do you cut costs to increase margins or try to win more business to increase your turnover? If you’re an accountant you’ll go for the cost option every time, but not many accountants are also successful entrepreneurs, so you’ll probably chase more turnover, quite right too, that’s the only way to grow your business.
It’s the adrenaline fuelled lung bursting dash for the line that we as entrepreneurs crave, but sometimes it feels like you’re going up a downward escalator, and for every step you climb you go back two!
Once you start to understand this phenomenon you’d expect it would get easier, but there always seems to be another lesson to be learnt, another step to climb, for instance, you’re finally making a reasonably decent margin and your turnover is looking healthy, your accountant tells you everything is looking rosy (never a good sign) and out of the blue you’re biggest client suffers a catastrophe, absolutely nothing to do with you and yet you realise far too late, that more than half of your business is with a single organisation!
It’s obvious with hindsight, and in business there’s always plenty of people with 20-20 hindsight vision to tell you how you should’ve done things differently.
Next comes new legislation, it seems that over the last 20 years or so various UK governments of different political persuasions and the EU have simply loved to pile on the red tape. Employee rights, which for large organisations have very little impact can be an incredible burden to smaller businesses, tax rules which mean everything is in real time, and yet large clients still want to take 90 days to pay an invoice, intermediaries who act on behalf of local authorities and try to squeeze every bit of profit you make.
It really seems that entrepreneurs have an invisible target on their back sometimes!
So why do we do it? Many entrepreneurs and business owners are quite simply unemployable, we’ve done things our own way for so long that the thought of doing someone else’s bidding is quite simply, well unthinkable!
Personally I think it’s a lot like a benign addiction, we get a rush of adrenaline just thinking about an idea, a new product/service or a way of doing something better than it’s been done previously. We spend months, sometimes years perfecting the new product/service and eventually we unveil it to the world.
Then things don’t quite go according to plan, but it’s ok because we still remember that rush of adrenaline, so we persevere we adapt the design, we change some personnel, we borrow more money, put our house on the line and lose sleep, sound familiar?
Then something clicks, and the adrenaline is there again, the smiles are back and maybe, just maybe the bank balance looks healthy.
Before we reach the happy bank balance scenario above we usually have to fail. Failing as an entrepreneur is an occupational hazard, some of the best products and services were born out failure or a series of failures.
Walt Disney suffered a series of financial set backs in the 1920’s resulting in his having to sell the rights to ‘Oswald the lucky rabbit’, and debts totally $4 million. He believed in his ability to produce a product however, and with a little help from a cute mouse called Mickey he released Snow White and the Seven Dwarves in 1938, the turnaround was complete and Walt Disney studios moved into a prestigious new lot in Burbank California, and by the way who today remembers Oswald the lucky Rabbit?
All entrepreneurs have to learn that a thick skin and an ability to learn from mistakes is an essential quality, only by continuing to learn from failure can we produce better products and offer better services, if you’re not failing, you’re probably not trying hard enough.
Richard Branson also understands the benefits of failure, perhaps you remember Virgin Cola or Virgin Brides,“Do not be embarrassed by your failures, learn from them and start again.” - Richard Branson, founder of the Virgin Group.
The attitude to failure in the UK has traditionally been markedly different to that in the US where a culture of risk taking and investment means that many people are prepared to ‘have a go’. This is changing in the UK, as of today some 60% of private sector jobs are in the SME sector and over 99% of businesses are described as SME’s.
If small business was a sector of industry instead of a diverse group of businesses spread across many sectors we would indeed be a colossus of British industry, but that shouldn’t stop us shouting about the importance of the entrepreneur and small businesswoman/man, Anita Roddick is quoted as saying ‘If you think you’re too small to have an impact, try going to bed with a mosquito!’
That is perhaps the real purpose to this piece, as entrepreneurs you never give in, the glass is always half full, it has to be otherwise you’d go and find a job working for someone else and be perfectly content with the 9 to 5, but we really should be proud of the contribution we make, without us 60% of the private sector population would be looking for a job tomorrow!