Failure is Not An Option: It’s Probable
Another Blog Installment from “Small Business 101: From Start-up to Success”
In the docudrama about Apollo 13, NASA flight director Gene Kranz (played by Ed Harris) is portrayed as saying “Failure is not an option”. Then since, that phrase as gone viral and is appropriately used as a strong motivational tool. In Apollo 13’s case, wonderfully, failure was not an option and the three astronauts – James Lovell, John Swigert and Fred Haise – returned safely to earth. Unfortunately, failure often occurs, even in failure-is-not-an-option NASA.[i] Worse yet, in the business world, failure is not an option, it is a probability. This blog is about failure and anticipating failure.
In next week’s blog, I will address some of the reasons for start-up failures and how you might avoid them.
- “May the odds be ever in your favor” – 80%+ Probability of Failure
From the wildly popular book and movies series, The Hunger Games, the infamous line “May the odds be ever in your favor” belies the harsh reality: the odds are not in the participants’ favor. Similarly, if you are thinking about starting your own business, remember this key fact: the odds are not in your favor. According to Bloomberg, eight of ten business start-ups fail in the first 18 months. Small Business Trends reports that, by the fifth year, 95% have failed. Clearly, business failure is more than an option: it is a probability. And despite all, start-ups happen everyday.
- Failing Fast, Learning Fast
According to some, the chief mantra for Silicon Valley and entrepreneurs everywhere is (or, at least, should be) “Fail Fast, Fail Often.” There are many different permutations on this theme, such as “Fail Better” or “Fail Forward.”[ii] To some extent, it’s just hype since most people do not embrace failure but will do almost anything to avoid it. Just ask John DeLorean what a stressed out business man might do to avoid losing his company. Clearly, we do not go gently into that good business night. That is as it should be: we should have a Churchillian attitude of never giving up. But we must also go into a start-up with the clear understanding that, odds are, it will fail. If you cannot accept that harsh reality, don’t start.
- Edison and his light bulb – Have An Experimental Attitude
From the “They Did Not Give Up” webpage, we read that Thomas Edison’s teachers said he was “too stupid to learn anything” and was fired from his first two jobs for being “non-productive.” When a reporter asked, “How did it feel to fail 1,000 times [in inventing the light bulb]?” Edison replied, “I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.” Business start-ups are capitalism’s grand experiments. For example, from 1896 to 1930, there were over 1,800 different car manufacturers in the US; most failed.[iii] But the survivors changed the face of America and the world. For the record, Edison didn’t really invent the light bulb. Rather, his team invented the first commercially practical light bulb.
- House Limits – Establish a Stop Loss
Prudent gamblers go to Vegas with a stop loss limit in mind. Before even stepping inside a casino, they place a specific limit on their potential downside. If (when?) they hit that limit, they walk away. Similarly, successful financial investors and companies play the same game, analyzing and calculating just how much they are willing to invest in project A or stock B before they write it off as a loss. Before spending their first dime, these investors and business managers already know what their last dime will be. Yes, as new information and data is obtained, new calculations are made and new stop losses are established, but that is not the point. The point is: there is a calculated and effective stop loss. Before beginning, know your stop loss point. If it hits, exit.
- Steve Jobs – Failure Can Be the Greatest Thing in Our Lives
Failure is inevitable. There isn’t a successful entrepreneur out there who hasn’t failed at one time or another in more than one of his or her business ventures. In fact, failure is commonplace. But it is not all encompassing. The US and World economy thrives not because businesses fail but because, despite all the odds, hundreds and thousands and millions of companies succeed. Failure is an option. Fortunately, wonderfully, it is not the ONLY option.
In next week’s blog, I will address some of the reasons business start-ups fail and how you might migrate against such risks.
Brett R. Keenan is a Business Coach and Retained CFO/General Counsel for Small Businesses and author of the “Small Business 101: From Start-up to Success” blog. Based in Chicago IL, B.R.Keenan & Associates has helped numerous large and small companies with Finance, Law, Operations and Strategy since 1999.
©BRKeenan & Associates, LLC. December, 2014
[i] See NASA Challenger disaster and the Mars Climate Orbiter