Why Failure Can Spell Future Success for Your Small Business
Entrepreneurs don’t go into business to fail. Business owners, founders, and managers are focused on, and driven by, success. Failure is frowned upon in the world of enterprise, and especially in the Caribbean. In several countries across the region, there is limited protection from bankruptcy that may result from a failed business, as well as severe consequences and penalties, such as exclusion from certain careers and esteemed positions, accessing credit, securing contracts, and receiving various incentives and opportunities, which essentially diminishes any chances for future recovery. This severe punishment for the risk-taking entrepreneur is why failure is considered so shameful, in the Caribbean.
We must have greater respect for failure. It is not final, and can actually serve as a driver for innovation and growth. According to the World Bank, businesses in Latin America and the Caribbean that do not innovate and remain small risk becoming obsolete or uncompetitive. The world’s most innovative and dynamic companies embrace failure as part of the creative process. Simply put, innovation requires experimentation and constant trial and error. Concepts sometimes fail, and it’s okay. In fact, each iteration of a promising product, service, or business model serves as the building blocks for future success. The key is to accept failure as part of the innovation process. For example, small businesses might want to consider the lean approach when developing new products and services. In recognizing that customer validation and acceptance typically takes several cycles, it is prudent to keep costs down during the proof of concept phase. Budgeting for failures and allowing employees reasonable latitude to create and learn from multiple attempts should be included in business plans and where possible, company policy.
Failure also brings increased knowledge, skills, and business acumen to the organization, its leaders, and employees. When a business fails the entrepreneur understandably faces significant emotional distress; there are often financial and personal consequences as well. Once you can recognize the failure as a pillar of learning, and can as the same time, commit to applying the necessary corrective measures, the experience can provide the expertise required for building more resilient businesses. Personally and professionally, failure can build a strong knowledge base and strengthen character. One way companies can purposefully capitalize on failures is to record these experience and the lessons learned. The next step is to conduct a critical assessment of what went wrong; document the steps that can be taken to prevent avoidable and unconstructive mistakes, and use risk management to proactively manage uncertainties that can threaten future success.
The critical lesson in all of this is that failure can spell future success when we change our mindset around it, and take the time to be strategic and deliberate about applying the lessons it teaches.