Few could argue with “Sly’s” logic: the entrepreneurship “world ain’t all sunshine and rainbows” indeed. Given the slim odds of successfully building the next unicorn and changing the world, it is extremely surprising new founders are never taught to anticipate and prepare for failure. We are often coached on how to polish business models, pitch our ideas, secure funding, create and manage teams, and yet find ourselves alone when dealing with the failure knocking on our door.
The difference between a failed startup and a successful “exit” (a.k.a a fire sale or a soft landing) could often be explained by simple choices a founder(s) makes in the final weeks and months of his or her endeavor. Those who catch the impending doom early, are prepared and approach it with a concrete plan, showing maturity and considerations of all stakeholders, get to play the game again at a later time. Those who scramble at the last minute, succumb to emotions and approach it irrationally, usually find a bright red “failure” stamp on their arm just before they are labeled as a “black sheep” and ultimately forgotten.
Although there are far better men and women who could teach you how to fail with grace, I would offer three general points you should consider. Every founder should build a game plan for action (or at least an outline) just in case our golden idea doesn’t deliver.
#1 Leave your ego at home
It seems obvious but it rarely happens. Have the necessary critical drive and belief in your success but also learn to look objectively at the situation at hand. If things are not going great, make sure to read the data correctly, listen to your customers and talk to your team and advisers. Know when you need to throw the towel and move on. The earlier you catch it, the more time you have prepare the soft landing. You will burn fewer bridges and avoid a lot of stress along the way. At the end of the day, it is your baby but doesn’t have to be the last one…
#2 Be a good custodian
As founders we carry a heavy burden. Employees, investors, and customers have all trusted us with their money, time, and energy. A responsible founder, who sees the end of the road has an obligation to put all stakeholders ahead of his or her interests. Some will say it is obvious and yet few follow the rule. In some cases, being a good custodian means turning down the next cash injection from investors or not hiring an employee who could turn things around. At the end of the day, if all you could do is return any outstanding cash and be frank with your team, you will be remembered well.
#3 Be mindful of the hidden stakeholders
Don’t take family or co-founders for granted. Although we usually forget those closest to us, they are the ones carrying us through both our successes and failures. Any decision we make that taxes their lives or cuts away from their future opportunities must be heavily discounted. We are not only sacrificing ourselves but also sacrificing them: something we rarely have the right to do. In their love and support, they are usually quick to back our crazy ideas so it is our own duty to put the breaks and ensure their future is secure. Even if it means shutting down a dream.