How to get back after a business fails

For small business owners, failure is not an option, it is a reality.

“One of the inner secrets of great entrepreneurs and business people in general is that they are resilient when it comes to failure,” says Mark Coopersmith, co-author of “The Other ‘F’Word: How Smart Leaders, Teams, and Entrepreneurs Put Failure to Work “and a faculty member at the University of California, Berkeley’s Haas School of Business. “Mistakes happen a lot.”

What can set you apart is how you react to failure at the moment and what you learn from it when you look back.

SWALLOW CORRECTLY
Before you leave your business,

Make a list of everything you need to do to shut down properly. A lawyer or financial advisor can help with this process.

“If you’re in serious trouble, people sometimes do stupid things,” says Manny Henson, a certified financial planner and founder and president of Maryland-based Gamma Wealth Management. ”
Talk to your consultants to make sure you understand what to do. ”

That process includes paying your taxes, paying your employees and closing your books properly. If you miss any of these steps, you could risk fines and jeopardize your reputation.

“It’s a small world today and you have to treat people well,” Henson says. Reminds you your business’ failure will fade, but “how you relate to and respond to that situation will affect you for longer.”

TAKE CARE OF YOURSELF

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Once you have closed the store, take the time to take care of yourself.

A business failure can feel like the death of a friend, says Penny Pompei, who coaches small business owners in the Palm Beach, Florida area and is a certified SCORE mentor. It’s OK to mourn the loss.

Before investigating what happened, “Stop and breathe,” Pompeii says. “You just have to be able to just decompress and give yourself permission and time to mourn.”

If others ask why your business went down, you do not have to give an answer right away.

“Do not even try to go there, for your first inclination is going to be to blame,” Pompei says. “You really do not know yet what happened.”

FIGURE OUT WHAT HAPPENED
When you are ready to look back on your business, Coopersmith recommends that you bring together trusted stakeholders – such as customers, partners, key employees, investors or financiers – for an autopsy.

To start, ask, “What were the risks we missed?”

As an investor or when presenting a business plan, he focuses on mitigating the risks companies face in five areas:

* Ensure you have a product that customers actually want.

* Creating a high quality product.

* Having the right team members who can execute well.

* Design the right business model and ensure adequate financing.

* Overcome legal or regulatory barriers.

This frame is “a really good way to look and say, ‘Where do we think we failed?’ ” Says Coopersmith.” Was there a domino tipping? Or was it all of them? ”

External forces play a role. Sometimes a disaster like the COVID-19 pandemic suddenly strikes. Sometimes the timing is just wrong.

But one can still learn a lot from looking back.

“The ultimate failure,” says Coopersmith, “is if you fail and do not go away with an insight that says, ‘That’s what I could do.’


MAKE THINGS DIFFERENT NEXT TIME


Pompeii says many entrepreneurs who experience a business failure will try again.
Before you start a new business, she says, make sure your business plan includes an exit plan that specifies what will trigger the closure or sale of the business so you protect your personal finances.

“It can be time-related, it can be money-related, it can be age-related,” Pompei says. “It’s just a critical piece of the puzzle.”

Make sure you and your family are emotionally, physically and financially ready to try entrepreneurship again, says Coopersmith. If you are, he recommends that you find a group of peers who can share challenges, resources and advice along the way.

Think critically about your last team and ask back to the people you would like to work with again. And when you launch, you need to be at the forefront of your colleagues, employees, and investors about the challenges you face because they are there to help you navigate them.

Finally, do not fear failure – it is a part of every business in one way or another, even those who do not perish.


Respect the fact that (mistakes) happen all the time, ” says Coopersmith. “Go in with it, and then manage your risks throughout the process.”


(This article is syndicated by AP from The Conversation)

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