How Can You Build Resilience In The Face Of Entrepreneurial Failure?

Failure is possible in entrepreneurship, as in every field. It is emphasized that entrepreneurship plays a vital role in all economies and that current and future economic development cannot be achieved without entrepreneurs.

Entrepreneurship involves establishing a venture to develop ideas, transform them into products or services, and bring them to market. Experts define entrepreneurship as “establishing a new business” and this definition is widely used and accepted in the literature.

However, entrepreneurship is not limited to just establishing an organization; it means more than that; In addition to establishing a new organization, it also includes activities that include the growth and development of an existing/newly established organization, and also refers to the development process of all kinds of innovation and change.

In this respect, when considered from a broader perspective, entrepreneurship is where individuals or groups recognize -profitable- business opportunities, follow these opportunities, and use these opportunities by establishing new enterprises or within existing enterprises to create wealth/welfare, thus creating new economic activities.

It is a process consisting of a series of subsequent phases or events. The development of each stage in the process requires entrepreneurial skills, and entrepreneurship is a phenomenon that affects all organizations regardless of size or age.

Why Is Resilience Essential For Entrepreneurs, Especially In The Face Of Failure?

It is stated that for entrepreneurs, success is a combination of hope for success and fear of failure. Hope for success refers to an approach of motivation that includes the desire to achieve success and the expectation of reward, while fear of failure refers to a motivation to avoid failure that includes the expectation of failure.

Achievement motivation is an effort to do things better, taking into account perfectionism standards, and is not an innate and unchanging personality trait.

Therefore, how much effort people will make to be successful, how accurate decisions they will make in this process, whether they will try alternative ways in any negative situation, etc. It can be said that these factors are affected by expectations and perceptions about the process.

In cases where the fear of failure exceeds the hope of success, the person generally tries to reduce the anxiety about failure by choosing very easy or very difficult activities. Therefore, success is a result that all entrepreneurs desire.

There are 6 areas that entrepreneurial failure significantly affects; financial domain, emotional/psychological domain, social domain, professional domain, and entrepreneurial domain. Indeed, failure imposes a financial cost on the entrepreneur, at least in the form of a contraction in personal income or loss of income.

Apart from these and similar economic consequences, there may be some other consequences for the entrepreneur. In such a situation, entrepreneurs can often lose self-esteem, reputation, image, and status. In the context of personal and professional relationships, failure can result in social costs such as the breakdown of marriages and close relationships, the loss of important social networks, and social distance in relationships. 

Emotionally and psychologically, business failure is similar to the loss of something important or a loved one and often causes feelings of grief. Also, depression, panic attacks, anxiety, phobias, etc. leads to results.

It can also cause different physiological problems such as insomnia and weight loss. In short, there are two interrelated psychological costs that the entrepreneur must bear regarding the experience of business failure; emotional and motivational.

What Strategies Help Entrepreneurs Bounce Back Stronger After Business Setbacks?

Entrepreneurs can recover stronger after a failure with strategies to evaluate new business opportunities, show flexibility, and maintain their motivation. We generally express the concept of failure in entrepreneurship as the termination of ventures, bankruptcy, and the collapse of the business. 

Historically, the failure of the enterprise and the failure of the entrepreneur have been considered synonymous. On the other hand, some studies perceive the concepts of failure differently at the individual level of analysis and the organizational level of analysis. The end of initiatives should not always be perceived as failure. 

For example, some entrepreneurs may liquidate their ventures to reap the rewards of their investments, while some entrepreneurs may retire or close their ventures to pursue alternative employment opportunities. In this way, exits that mean the end of the enterprise (from the business/industry) have generally been seen as positive exits rather than failures. Entrepreneurs’ bankruptcy etc. 

Losing their ventures as a result of financial difficulties such as this can be called failure. For this reason, the entrepreneur’s exit from the venture he founded may not necessarily be considered a failure. The important point here is to evaluate individual and organizational failure according to the circumstances and results.

Can You Share Stories Of Resilient Entrepreneurs Who Turned Failure Into Success?

When Nick Woodman (44), one of the world’s youngest billionaires, is mentioned, the wearable action camera brand GoPro is of course the thing that comes to mind. Nick Woodman, who has set his mind on being a successful entrepreneur since his student years, is a name that has tasted failure while dreaming of millions of dollars. Nick Woodman gave life to two different ventures before introducing GoPro to the industry at the age of 29.

The first of these initiatives is EmpowerAll.com, an e-commerce site that aims to sell cheap electronic devices to a young audience. Contrary to expectations, the company made almost no profit, causing Nick Woodman to declare bankruptcy in a short time. However, Nick Woodman’s warrior spirit was the biggest obstacle to giving up. 

On the contrary, this failure spurred him on even more. In 1999, the business world met FunBug, Nick Woodman’s second initiative. FunBug, an online company that combines marketing with gaming, seemed to be successful in the early days.

So much so that it even collected an amount of $3.9 million from investors. However, Nick Woodman perhaps overlooked the concept of sustainability, which is one of the most basic steps of an enterprise.

Unable to create a sustainable customer base, Woodman could not create sustainable profitability. This being the case, failure became inevitable. The cost of this failure to Woodman was 4 million dollars.

After the second failure, Woodman said goodbye to the world of entrepreneurship for a while and went on a long surfing holiday where he would be more involved with surfing, his favorite sport. When he returned to the world of entrepreneurship, he would achieve a complete success story.

How Does A Growth Mindset Contribute To Entrepreneurial Resilience?

For many entrepreneurs, the idea he developed is perfect. But what is important is not the idea in your head, but the idea that has been tested and validated in the market. Because a product or service only finds meaning when it is purchased by its customer.

If entrepreneurs proceed without testing their ideas, unfortunately, after a while, they may encounter a shock that the market does not need them.

Designing, producing, and bringing a product or service to market requires significant time and capital. This process needs to be simultaneously shaped by customer feedback.

If progress is made without receiving any feedback from customers, in case of negative feedback after being released to the market, the entire process will have to be reworked from scratch, which will be quite costly. Considering that a technology startup already has a short-term budget, such a mistake can destroy a startup.

What Resources And Communities Exist To Support Entrepreneurs During Tough Times?

Incubation center is a very familiar term for those who are in the world of entrepreneurship and follow the sector closely. Before coming to the incubation center, let’s talk a little about what the entrepreneurship sector is, which has not been fully defined.

Entrepreneurship, in its most basic definition, can be said as the breakthroughs made by people who plan the solutions produced as a result of a determined problem or a deficiency in any sector in a way that creates an income model, and takes risks and starts a business based on this income model.

Entrepreneurship has recently become a sector known and frequently mentioned by many people. With developing technology, people began to realize that they were not that far from realizing the projects they dreamed of.

The harsh working conditions in corporate companies and the desire to earn more money quickly led the whole world to the world of entrepreneurship. Entrepreneurship is a world that revolves around terms such as taking risks, making money, and providing services.

See you in the next post,

Anil UZUN