Our attitude to failure could be the business world's downfall
5 min read
14 November 2018
Stories abound of hugely successful entrepreneurs with a string of mistakes behind them. So why are Brits unwilling to accept failure as a part of the business journey?
Over the last decade, the “Startup Revolution” has undergone a massive transformation. At its height – 2016 – an incredible 660,000 companies were established. And while it has since started showing signs of fatigue, the numbers are still impressive.
After the financial crisis, the Cameron-Clegg Coalition was markedly pro-business. David Cameron voiced his belief that British businessmen and women would roll the UK into recovery mode. So the Coalition gave new and/ or increased tax breaks on investment, supported countless startup initiatives and, in particular, worked with StartUp Britain, a campaign led by entrepreneurs.
SMEs were seen as the future of this country. Business and government alike were working together to achieve common goals.
Fast forward to 2018 and we realise that chancellor Philip Hammond, and the treasury, neither understand nor support small business.
The FSB reported at the end of 2017 that 14% of small businesses were expected to scale down or stop trading altogether this year, following on the heels of what was a record number of small businesses doing so in 2017.
We have seen large businesses hit too, with many household names disappearing from the high street. In fact, all its occupants, large and small, have been massacred. Even charity shops are now affected. Pubs and restaurants have also felt the brunt, with restaurant insolvencies increasing by 20% in 2017 alone. No sector seems to have escaped, not even the usual success story – the manufacturing industry.
At least we have resilience going for us. A Vistaprint survey suggested that British business owners are more resilient in the face of failure than their counterparts in Germany, France or Italy. Nearly two-thirds of those surveyed said they would launch another company if forced to close, higher than any of the four.
But while we may appear to be good at trying things again, there is a duality of attitude to business failure. Some 31% said they found failure unacceptable.
A high majority said they would not start a business with a failed entrepreneur. And there lies the rub. We still pass automatic negative judgement on those who have failed.
Vistaprint’s research also found that women find overcoming failure harder than their male counterparts. However, the biggest difference is in responsibility for failure with 44% of the women acknowledging they could have been more strategic in comparison to 15% of men.
Women also cite personal reasons for business failure, especially within the age group of 25-34. This would suggest there is still not enough support for those trying to balance motherhood and starting their own business.
Never-the-less, the women surveyed claimed the best way to cope with failure was to shake oneself down and try again. Despite this, the fear of failure, women said, was the main reason for not launching a company. And small wonder with the dichotomy of attitudes toward business failure.
It is easy to see where the negative attitude toward people having a second attempt at running a business comes from. Most of us have a horror story to share. We lost hard-earned cash to a company in trouble, only to watch a phoenix company emerge, doing precisely the same thing, sometimes even in the same premises.
Providing there is no wrong-doing, it is perfectly legal for an insolvent company to take this route. Fuller restrictions only apply in liquidation. However, these phoenix companies are viewed with moral outrage by many.
Any entrepreneur starting another company gets easily tarred with this same brush.
The irony is that one of the most repeated maxims of successful business leaders is that there is no greater teacher than failure. We learn the most from it. We are encouraged to applaud it when it is part of tales of success.
Stories abound of hugely successful entrepreneurs with a string of mistakes behind them. Sir Richard Branson has had his share. Bill Gates’ pre-Miscrosoft business sunk to the depths. Henry Ford failed twice with the Detroit Automobile Company and the Henry Ford Motor Company. Even Walt Disney’s first animation company went bust.
We love stories about business heroes rebounding against impossible odds. Yet 63% of Brits still say they would never start a business with an entrepreneur who had failed.
I wonder how many people walked away from Disney, Branson, Gates and Ford after earlier failures.