You’ve seen the headlines. Series A rounds are increasingly difficult to raise and hundreds of first-time entrepreneurs are going to be left with failed businesses.
There are all kinds of “failures” in the startup world. There’s returning money to investors, shutting down a company without returning investor money, and even an acquisition that doesn’t return all the money invested. Often the advice to entrepreneurs is: If you want to raise money again, you’ll have to spin the outcome.
But an entrepreneur is far better off embracing the failure of the moment. No one likes shutting down, but spinning doesn’t give her what she needs to move on. Here are important steps an entrepreneur should take to emerge with renewed grit.
1. Celebrate the ending.
It doesn’t matter how it all ends; it’s important to mark the ending. It’s easy to say, “don’t be ashamed” and much more difficult to actually feel that way. It’s counterintuitive, but talking will help alleviate the shame. Talk with your employees about the end. Talk with your seed investors about what’s happening and why you think it’s happening. Then, take some time to mourn the end. Do as early stage investor Brad Feld highlighted and have a wake. Include your fellow entrepreneurs and community. The more you share your experience, the more you’ll find you’re not alone.
2. Stop taking all the blame.
Many first-time entrepreneurs with failed businesses will be women. Steve Blank’s recent post on how founders should deal with startup failure encouraged founders to accept their role in the failure. It’s helpful advice, but I’ve found that women tend to have the opposite problem in these situations.
We tend to believe that any failure is all our fault. Guess what? It’s not. There are a lot of factors, many beyond your control that contribute to the end of a business. You can be accountable without taking on all the responsibility. Taking on too much responsibility is the same as not taking any: Neither is appropriate nor accurate. The more you can see the gray in a situation the more likely you will be able to walk through the next part of an ending: the transition.
3. Embrace transition.
Transitions: Making Sense of Life’s Changes by William Bridges outlines the three phases of a transition: “(1) an ending, followed by (2) a period of confusion and distress, leading to (3) a new beginning.” Read the book. You’ll be frustrated because you’ll be looking for actual things you can do to get through a transition. But there’s no getting through it. You actually have to mark the ending, and then live in confusion and uncertainty for a time until you find your new beginning.
Entrepreneurs with a failed business often jump into another business quickly, assuming it’s best to get back on the horse. That can feel comfortable--it can feel as if life is moving forward--but failing to do the work a transition requires only means that failure will come back to haunt you in your newest endeavor.
Spend time to live in the discomfort. It will give you a perspective that you wouldn’t get otherwise. That is, life has its ups and downs and frankly, its valleys. You’re on a journey and there are more mountains to climb.
[Image: Flickr user Riccardo Meneghini]