Every entrepreneur feels it at some point: the fear of failure. Only half of new businesses make it to their fifth birthday, and that can cause entrepreneurs a lot of stress. However, experts say failure can actually lead to major accomplishments.
In fact, failure has been a key ingredient in some of the business world’s great success stories, says Michel Bergeron, Senior Vice President of Marketing and Public Affairs at the Business Development Bank of Canada (BDC). “Canadian entrepreneurs and the public at large need to be more forgiving about failure. Failure–and learning from mistakes–is often an important milestone on the path to success,” Bergeron says. “We have to change our perception about failure in order to help business owners stay in the game.”
Deborah Conroy of EY agrees. She points to the new BDC Entrepreneurial Resiliency Award, an initiative that recognizes a Canadian business that has successfully undergone a turnaround or pivotal event in the past and come back stronger because of it. “Many entrepreneurs talk about some kind of massive failure or hurdle they’ve overcome,” says Conroy, Vice President of Transaction Advisory Services at EY. She is also President of the Montreal chapter of the Turnaround Management Association, a group for corporate turnaround experts that teamed up with BDC for this award.
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No business is too big or too small to confront roadblocks. Bergeron cites the example of Groupon, the giant deals website. The company got its start as a social media site called The Point, which was created to help people connect for social activism purposes. After a year of effort and US$1 million in operating costs, the start-up was going nowhere.
“The founders shifted gears and turned their offering into the discount coupon service Groupon. They learned, adapted and made a fortune,” Bergeron says. Two years later, the shift in focus proved profitable: Groupon ballooned from a few dozen employees to 10,000 and was the fastest company in history to make US$1 billion in revenue.
Bergeron advises entrepreneurs to adopt a “try, try again” philosophy. At its core: learning from mistakes and showing resilience, a new business approach that is growing in popularity in today’s rapidly changing economy, he says. Instead of the old model, which emphasized extensive planning before launching a new venture—by which time technology and markets may change substantially—the new approach favours a lean and nimble start-up.
The idea is to engage customers early with a basic product, even if you haven’t worked out all the bugs. The second step: Learn quickly from customer feedback and missteps. Third: Constantly refine your efforts. And the final secret ingredient: Don’t give up.
“I don’t think fear is all bad. It can be healthy and reasonable. It keeps entrepreneurs from making rash decisions,” Conroy says. “But it’s important to avoid excessive hesitation and waiting for the exact perfect moment. Trying, failing and trying again is much better than not trying at all.”
Canadians slow to accept failure
How do entrepreneurs turn failure into success? “They have had a knack for seeing failure as an opportunity or challenge,” says BDC’s Michel Bergeron. “When solution ‘A’ didn’t work, they tried solution ‘B’ if they were still convinced there was a need. Or they decided to meet a different need and, in the process, found a new path. The setback helped them identify a weakness, and they fixed it.”
Deborah Conroy of EY agrees. She cites a 2013 EY survey that found the following:
- Over one third of Canadian entrepreneurs (35%) said business failure is seen as a barrier to future business prospects. This is 9 percentage points higher than the average across the G-20 countries, which was 26%.
- Canadian entrepreneurs may be more worried about failure because of “higher expectations,” but they should also keep in mind Canada’s “many entrepreneurial upsides,” such as the low cost of starting a business, the survey authors noted.