A business failure isn’t rare. About one in five new businesses fail after the first year. That failure rate jumps up after five years — approximately half of these new businesses close their doors for good. Every entrepreneur faces an uphill battle when they start their own venture. There’s no shame in being one of the many who can’t make the climb.
The only thing that you can do is invest your time and resources into your recovery. Include these three steps into that recovery plan:
1. Take Care of Finances
Businesses often close because of financial reasons. They aren’t making enough profits to deal with operating costs and staff payroll. They are in debt after seeking funding from banks, investors and alternative lenders. And since they have to close their doors, owners can feel trapped under the weight of how much money they owe for different types of loans.
If this situation feels familiar, you might want to consider filing for a consumer proposal. Consumer proposals create legally binding agreements between debtors and their unsecured creditors. Through the agreement, the debtor will pay a promised amount within five years, and then the debt will be considered cleared. The solution relieves stress from repayment and puts a stop to things like collection calls.
You will want to visit a licensed insolvency trustee for this —
understanding consumer proposals can be complex for the uninitiated. They will guide you through the application process, file the proposal, and provide credit counselling to ensure future financial stability. The debt from your business doesn’t have to follow you for the rest of your life.
2. Reframe the Failure
Think of it like a driving test. If you don’t get your license after your driver’s test, does that mean you should never drive again? Does that mean learning to drive was a waste of time? Does it mean that you are a bad person? Of course, not. It means that you didn’t pass a test on the first try.
The pros of
Dragon’s Den recommend that owners take the difficult situation as a learning experience, not as a personal failure or a sign to never try again. Reframe the problem in a positive way. It was an opportunity and an ambitious step in your career. It wasn’t a complete loss.
3. Learn from Your Mistakes
Right now, you’re smarting from the failure. But, you still have the entrepreneurial spirit. You know that you will try another venture in the future.
Before you get ready to start over, take a look at some of the most common
reasons for business failure and make a note of all the missteps that you made. It can be anything from choosing a bad location for a storefront to dealing with sky-high operating costs. Recognizing your mistakes and learning from them will make it much easier to find success the second time around.
The moment that you have to close up shop can feel devastating. But, it doesn’t have to feel like that forever. With these simple recovery tips, you can pick yourself up and dust yourself off. And one day, you can try to open up a business all over again.