Failure Is Not An Option, It Is Part Of Entrepreneurship
Even as a child I was fascinated by the exploits of astronauts who braved unknown dangers to explore outer space. So when I stumbled upon the famous quote about a space mission saying “failure is not an option,” it seemed like an excellent idea to inspire people. The title came from the movie “Apollo 13”, which showed the tremendous hardships and courage of the astronauts in a problem-stricken space flight to the moon.
I realized, however, that the quotation is not applicable in business. Failure is commonplace in business. And not only that, failure is also inevitable; being unprepared to cope with its consequence is the height of recklessness. Whenever there is risk, there is the possibility of failing—and entrepreneurs cannot avoid taking plenty of risks.
Failure Is Not Necessarily Fatal
Being branded a failure is so undesirable that I have known people of enormous talent who preferred the sure cash flow of being on the payroll instead of taking risks. Some would rather be employees instead of putting up their own businesses, even if they have the capital and the opportunity. Nevertheless, they may have very well made the right decision because the life of the entrepreneur is not for everyone.
There are many types of failure in business—some of them cannot be avoided, but not all of them must happen. The kind of failure most often talked about is the bankruptcy of the company itself. While common among start-up companies, in most cases if there is ample preparation and capital, there is a good chance of the venture not only surviving but growing. The only exception to this is if you base your business on a fad.
Be assured that most of the failures in business are not fatal to a company. Usually there are ways to survive the damage. Failure happens, but there are many ways to lessen the chances of its occurrence. Below are just some of the many strategies you can employ that are applicable to either starting or expanding a business:
• Have sufficient savings. Your spirit may be willing but if you have no means to carry out your plans, you can only dream. While capital needed varies widely depending on the business, you can start your estimate by doubling your initial estimate. If you have no experience in the industry to make accurate projections, this is the best way to go about it. Take note that expenses have a tendency to balloon beyond your original plans. Make it a point to invest only half your available disposable funds so that you have reserves.
• Be careful in screening personnel. While good and loyal employees are the key to your success, they too are the main liabilities if you are not careful in your hiring. Conduct a thorough background check and require all the usual documents, like the NBI clearance. A drug check should also be part of the screening process.
• Have fallback options. There are many ways to soften a setback. Do not burn bridges with your employer. If things did not go well, going back to your previous work may be a safety net. Even if you plan to work elsewhere, you will need their support as character references. Study the various strategies you can employ to minimize risk.
• Have sufficient insurance. One aspect often overlooked is the purchase of various types of insurance. Almost all small businesses lack insurance coverage. This is false economy since nobody can tell when disaster will strike. At the very least, have enough insurance so that you will have sufficient funds to restart. Besides conventional ones like fire and life insurance, there are many instruments offered that will reimburse you for losses suffered. Among these are the business interruption insurance and performance bonds. Get to know more about risk management to learn what precautions to take.
• Have modern control methods. Most entrepreneurs are so engrossed in the operations that they fail to establish proper control systems. Having a formal system of checks and balances is preferable to relying only on trust. It is important to establish control at the start because there may be more employee resistance later on.
• Have faith in success. Although there is no way to predict if a plan or venture will succeed, belief in success is critical to improving your chances. But the kind of faith needed relies more on the confidence that comes from knowing well what to do, rather than blind optimism.
• Use setbacks to make radical changes. If the company is in crisis, it is easier to introduce changes because the need is apparent. This is the time to make the necessary cutbacks in personnel. You may also demand extra effort in order for the company to survive. Be bold in making changes because you may not have this opportunity in ordinary times.
• Learn from failure. The best thing you get from failure is the lessons learned. You can read all the business case studies you want, but nothing will teach you better than experience. It is virtually impossible to forget what you yourself have gone through.
Saying that failure is not an option may work for situations like motivating your sales force. However, in most cases, the entrepreneur must consider the possibility of failure in order to limit the damage.
*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.