Failing Forward: Overcoming the Trauma of Business Failure

 Every entrepreneur I coach has a failure story. I’ve noticed that their success often depends on how they tell that failure story. If they tell the story from a growth mindset, as in “this is how my business failed and this is what I learned from it,” then it’s likely that they will rebound and start another business. If they say, “I never should have started that business, it was a disaster…” I’m looking for signs of business failure PTSD. 

Being the owner of a failed, or failing, business is traumatic. It can feel like death from a thousand cuts. It can feel like a personal failure, or a character flaw. Business failure comes bundled with a package of emotions that include disappointment, sadness, fear, shame, or anger.

 Like any trauma victim, it helps if you surround yourself with a network of other entrepreneurs who have failed forward and successfully navigated through the long, dark tunnel into the light. Practice self-compassion, but don’t ignore the early warning signs. Every month, put aside the rose-colored glasses and take a hard look at your financials, imagining that you are your banker or your accountant. Better yet, seek their counsel as they likely have ideas on how to turn it around or how to exit gracefully.

 Even after a graceful exit, the trauma will linger as flashbacks, or cautionary tales. Just notice when that happens and give yourself a hug. Acknowledge the pain is real, but temporary. Carol Dweck, a psychologist who has studied the growth mindset, defines it as the ability to see failure “not as evidence of unintelligence but as a heartening springboard for growth and for stretching our existing abilities.”

 Having founded four businesses–two of which might’ve been characterized by my accountant as “failures”–I realized there where a number of thoughts, habits, or behaviors I had to adopt to nurture a growth mindset, manage my mental and physical health, and manage the risk: 

  • Don’t invest more than you’re prepared to lose.
  • Adopt the belief that “Whatever happens I can handle it!”
  • Lose the “Go big or go home!” attitude and create realistic success metrics.
  • Shift from “What have I lost?” to “What have I learned?”
  • Remember that the most valuable asset in your business is yourself. Sleep, exercise, and gift your body and brain with plenty of water and healthy food.
  • If you’re feeling like a loser, stop and do something that you excel at.
  • Give yourself a “mistake allowance” of three inevitable mistakes a year.
  • Every quarter, take time to reflect, celebrate successes, and readjust expectations based on the “ground truth.”
  • As soon as you finish your business plan create an exit strategy. Plan for how you can exit gracefully, relatively unscathed, to embrace the next, interesting challenge.

 Most importantly, get into the habit of reframing. Reframe the “failure” as part of your education as an entrepreneur, or one of the R & D costs of innovation. Normalize failure as one of the costs of doing business, in general, because it truly is.  

By Laura S. Scott PCC, ELI-MP, CPDFA

Tampa, Florida, USA