It is an evolutionary imperative that we as humans do everything in our power to avoid failure. No one sets out to fail. When we really believe in our goals, we will double mortgage the house, raid the kids’ college fund, and take on debt up to and beyond the breaking point just so we can keep the dream alive.
This is a bad strategy. Worse, it is no strategy at all. It is the desperate flailing of an organism trying to stay alive at any cost, even if that effort is what is killing them. When companies do this, it often ends in financial ruin of the founders who poured so much into trying to make their vision a reality.
Even for that person, there is hope. Most likely they will have to seek a bankruptcy remedy to right the ship. There are many types of bankruptcy. It is a legal remedy that should not be undertaken without the advice of attorneys who specialize in that area. A good firm can also assist you in credit repair so that you can reignite your entrepreneurial flame.
A big part of credit repair is getting negative or false items stricken from your credit report. Almost 5 million items have been removed by Lexington Law since 2013. That phenomenal record underscores the growing nature of credit repair services. Their site, www.lexingtonlaw.com, contains more information about liens, bankruptcy proceedings and generally how credit repair works.
But what you want is not to be in that position. Yet we know that for successful companies, failure is not only an option, but a likelihood. As hard as we try to avoid it, we are going to fail sometimes. We have to fail sometimes.
Here are a few strategies to make sure your future failure is both graceful and recoverable:
Fail with Someone Else’s Money
Many people choose to incorporate their business as an LLC. They are particularly attracted to the limited liability part. They feel secure in the knowledge that if something goes wrong, they will not be held liable. However, limited liability is not the same a zero liability. They can still be held liable for more than they thought.
The best way to protect your personal assets from a business failure is not to use them in the first place. That is what angel investors are for. This infographic shows that angel investing is on the rise, and has been for the last ten years. For every person with a dream, there is another person with a pile of cash who wants in on it.
Angel investors expect a certain percentage of their investments to be a total loss. It is a part of the spreadsheet. But they are counting on the gains being greater than the losses. Not only does this strategy protect you, but it gives you a partner who is highly motivated to make sure you succeed if at all possible.
Fail Fast and Often
This is a reminder that some of the greatest successes in history were also among the most prolific failures of their time. Abraham Lincoln is said to be one of the biggest failures and the greatest success story of his time. When he failed, he quickly moved on to the next thing until finding success. This was a pattern throughout his life. In 1923, Babe Ruth hit the most home runs, had the highest batting average, all while racking up more strikeouts in baseball history up to that time. This truth of individual success is the same for businesses. According to the Daily Beast:
Failing quickly in order to learn fast—or what Silicon Valley entrepreneurs commonly call failing forward—is at the heart of many innovative businesses.
Failure is not the opposite of success, but a part of the success process.
Know When to Quit
If you believe that failure is not an option, go ahead and call a bankruptcy attorney right now. It may be a little early, but you’re going to need one sooner than you think. Failure is a natural part of the evolutionary process, if we did not fail at some tasks, we would never have evolved improvements. Failing gracefully is about recognizing the signs early enough, and taking action before a manageable failure takes down your whole enterprise. If you do not have a mechanism for doing that, you do not have mechanism for success. This is all a part of what Seth Godin calls strategic quitting.
Ultimately, the key to successful failing is recognizing it as a part of the natural process. Managing failure is a much better strategy than fighting it.
Featured Image Credit: Failed and success concept written with chalk/ShutterStock
