Statistics are clear. About half of all startups close within five years and about two thirds close within 10 years (US Small Business Association). The question is: should all of them be considered failures? Entrepreneurship delivers a variety of rewards that go beyond financial outcomes and that could and should become very valuable for the next stage in the founder´s life. Failure is closest when none of the following are met.
In most startups, people have to train themselves in a variety of disciplines and have no choice but to fill out multiple roles at once. They have the unique opportunity to create their own processes and strategy, all while having the constant pressure of delivering results. This amount of learning and doing just can´t be obtained at school or at any established company. For this reason, there is no better place to learn both business and leadership skills than a startup.
We all have to look at failure as the perfect learning experience. The key is figuring out what went wrong and using that information to prevent similar outcomes in the future. The valuable knowledge that is created should be used for re-launching the startup, next projects, starting an entirely new businesses, or even a new path.
Relationships and networks
As the saying goes, “it´s not what you know, it´s who you know”. Startups give you unparalleled opportunity to meet other passionate, hard-working dreamers and doers like you. There is hardly a better place to make connections from a variety of areas, functions and industries. They become a valuable source for information, advice, referrals or investment that can lead to new opportunities in the future. They could not only help you with your next business idea, but could also help you if you change careers or work for other startups or companies.
The friendships, contacts and networks built as an entrepreneur will last much longer and can become much more valuable than any single startup, successful or not.
There are plenty of people out there that hate their jobs. They go reluctantly to work every day mainly by inertia, necessity or obligation. Amazingly as it may seem, these people spent most of their adult lives under these conditions.
Entrepreneurs have given themselves the chance to explore, dream and create, in an area they are passionate about. For them, every day is about adventure. Far from wasting their time in boring repetitive activities, they have fun by doing what they like. After all, shouldn´t life be about doing the things we love?
So, should closing a business be considered a failure? Only if you don´t learn, establish relationships/networks or have fun. These returns can become more valuable than any single setback an entrepreneur may have. And according to statistics, there will most likely be plenty of them.
Do you know of any other reasons why closing a business should not be considered a failure? Feel free to share below.