Success and failure are just a part of life. Amazon founder Jeff Bezos once famously admitted, “I've made billions of dollars of failures at Amazon.com,” yet he’s still the richest man on the planet. It’s true: The mark of successful people isn’t how they’ve managed to succeed but rather how they’ve managed to fail and how they’ve managed to embrace failure as a stepping stone.
Life is a game of balance, and whether you’re the CEO of Google or a novice startup founder launching a business out of your garage, you’re going to have to learn how to grapple with both. In a weird way, success — the thing everybody wants — can be just as damaging as a true failure if you don’t play your cards correctly.
Common Small-Business Failures
There are a lot of common reasons small businesses fail. Whereas success stories can often be a stroke of luck, failure is something that’s a little bit more calculated. This is actually a good thing because it means you can learn and grow from your failures a lot more than you can learn from your successes (though you should still reflect on your wins as a company too).
If you’re running a small business, your likelihood of failure is actually pretty high. About 90% of startups fail; however, you can use that failure as a stepping stone to pivot your business to something more successful. Once you know what doesn’t work, you can try something that does. According to a survey from CBInsights, the top 10 reasons businesses fail are:
- A lack of need in the market
- They ran out of money
- They hired the wrong team
- They’re outcompeted
- There are issues with cost and pricing
- The product is user-unfriendly
- They don’t have a business model
- They have a poor marketing strategy
- They ignore their customers
- The product was mistimed
Really, only one of these missteps — poor timing — is truly up to luck, and that’s not even the case all of the time. The majority of these problems can be mitigated through trial and error, which means you’re trying things and likely failing until the one time you succeed.
Successful People View Rock Bottom as a New Foundation
It is overwhelmingly easy for failure to lead to a loss of enthusiasm, especially if it’s not the first time you’ve failed, but in business and in life, it’s important to view failure as an opportunity rather than a lack thereof. Some of the most successful human beings have used their most traumatic failures as a building block to create something totally new and out of their comfort zone.
For example, during her 2008 commencement speech at Harvard University, J.K. Rowling admitted that she was, “jobless, a lone parent and as poor as it is possible to be in modern Britain, without being homeless” before writing the "Harry Potter" series. At the time, she admitted that she was severely depressed and felt stuck enough to contemplate suicide. However, she soldiered on for her daughter and started writing while still on public assistance. The writer used rock bottom as a time to pursue her passion, and she now has a net worth of $1 billion.
Oprah Winfrey, who built a billion-dollar empire through a series of successes and failures, also has a similar mindset. "If you're constantly pushing yourself higher and higher, the law of averages predicts that you will at some point fall,” she told the Harvard Gazette. “And when you do, I want you to remember this: There is no such thing as failure. Failure is just life trying to move us in another direction."
A Fear of Failure Prohibits Innovation
Of course, small businesses want to succeed, but they should work hard to create an environment that allows for failure because failure often leads to innovation as long as you don’t get discouraged. For example, Amazon had a colossal failure with its Fire phone, but it ended up using that technology to create Amazon’s Echo Smart speakers and its digital assistant Alexa, which are arguably two of the company’s most successful products.
To make the most of a failure, companies should conduct a SWOT analysis, which identifies strengths, weaknesses, opportunities and threats. Rather than spending time feeling useless and dejected, this is a definitive action that can help you create a clear path forward and explore new opportunities that may have more success. As Albert Einstein once said, “I have not failed. I've just found 10,000 ways that won't work.”
Transform Failure Into Motivation
Failure is an opportunity to learn: The more you learn what doesn’t work, the closer you can get to figuring out what does, but it’s all about positive thinking. You can flip your failures any way inside your mind, so it's best to flip them toward a productive direction. For example, when a reporter once asked Thomas Edison how it felt to “fail 1,000 times” at making the light bulb, he replied, “I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.” He never viewed his failure as failure but rather as the process.
Similarly, Walt Disney was famously fired from his job as an animator because, as his boss claimed, he “lacked imagination and had no good ideas.” Instead of quitting, he used this as motivation to launch his own animation studio. When that failed, he pivoted to the world of Hollywood, where he built an empire.
Don’t Let Success Get in the Way
In 2011, the Harvard Business Review mused that leaders don’t learn from success, but this isn’t true as long as you evaluate your success properly. When businesses succeed, business owners tend to exhibit negative thought patterns like:
- Fundamental attribution errors: This is essentially believing that the reason you succeed is because of internal factors (your business model, talent and strategy) rather than external factors (luck, good timing, etc.). Always, always view external factors when trying to understand success because it can be the difference between future success and straight-up failure.
- Overconfidence bias: In layman’s terms, business owners can develop a dangerous level of self-confidence that makes them believe they already know all the answers and don’t need to change. Don't let your ego get in the way.
For these two reasons, it’s common that successful businesses — whether they’ve been acquired, landed a large amount of investor funding or are finally turning a profit — get outcompeted by disruptors. To avoid the pitfalls of success, business owners must always put in the hard work to constantly evolve and remain open to new opportunities and methods.
Always Take the Opportunity to Learn From Others
It’s true: Other people have failed so you don’t have to. It’s important to not only learn from your success and failures but to learn from others. In business, this is often done in a competitive analysis. Take a cold, hard look at your competitors, see what they’re doing well and how you can absorb those concepts in your own business and take a look at what they’re doing poorly and see how you can improve it.
Research has found that the most successful businesses are successful because their leadership possesses the same general qualities:
- Flexibility: Founders must have a willingness to adjust
- Commitment: You fail because you stop trying, not because you’ve failed
- Patience and persistence
- Willingness to listen, learn and observe: Seriously, you learn a lot through others
- Ability to foster mentoring relationships: Again, having someone show you the ropes really helps
- Frugality: Lean startup principles help companies operate when they’re bootstrapped for cash
- A balance of technical and business skills: This can be easily learned and may actually be an indicator of willingness to learn from prior failures.
Beyond that, the most successful founders were driven by impact, which means they launched businesses that related to an underlying passion or goal that kept them motivated throughout. It may take a bit of mental training, especially if you’re currently in the throes of a recent failure, but you can work on adopting these positive traits to better your overall business and set yourself up for success. It’s never too late to learn.