Failed Business? Here’s What You Can Do
There are several reasons why businesses fail. Either they run short on cash, their owners didn’t do their homework well enough to determine the demand for their product or service, or the company wasn’t planned well. There are more varied reasons, but the aforementioned ones come at the top of the list.
One would think that knowing some of the reasons would prevent small businesses from failing, but they still do. In fact, the statistics are clear:
- 78.5% of small businesses survive their first year
- 29% of businesses fail because of lack of cash
- 45.4% – 51% survive past five years, depending on the year the business was launched
The numbers can be intimidating, especially for first-time business owners.
The initial reaction to a failed business might be to just pack up and leave, vowing to never think again about opening a business. Yet, this is no time to have your confidence shaken to the core. This is the time to recognize your failure, own up to it, and begin to understand what went wrong and why. It’s not all gloomy, as you also need to look at some of the actions you can take despite such failure.
Here are some actions to take after business failure:
Closing the business
The first thing you want to do is to deal with the financial and legal status of the company.
In the UK, there are two ways to dissolve a solvent company:
- Filling out a “striking off” application
- Members’ Voluntary Liquidation
A limited company is a legal structure that is separate from the business owner. These structures are solely responsible for business debts related to the value of their investments or what they guarantee.
You can close down your limited company by getting it “struck off” the Companies House register in which the business had been incorporated, but there are stipulations:
- No selling or trading of stocks in the last three months
- No name change of the company in the last three months
- The company isn’t threatened to be liquefied
- No prior agreements with creditors
If your company doesn’t meet these requirements, then a voluntary liquidation must happen. There are different scenarios when it comes to shutting down a company. You can discover more here about closing a company that has retained earnings and assets and how that works depending on your financial status at the time of shutting down. It’s essential that you deal with assets before the company is finally dissolved so that you don’t make the process harder than it has to be.
Analyze the Failed Business
Chances are you will be able to identify why your business failed. No matter how short its history was, look over it in detail. Thus, you can pinpoint what went wrong, the wrong decisions made, and other factors that led to undesired outcomes.
While you’re analyzing the negative aspects, you must also put a lot of focus on the decisions that were effective. In essence, you want to take the positives and negatives into consideration to see the bigger picture.
Take a break
Failing, admitting your mistakes, and owning up to failure is emotionally stressful. It’s common that you would need a recovery period and a break to redefine your goals and what you want to achieve. If you can afford to take a break, do so. However, you might need to get a regular job to support you. If that’s the case, use the experience you went through to help you land a job.
Most often, however, entrepreneurs, will just pick themselves up, brush off the dust, and get back into the picture of private business because it’s not that easy to be under the command of a boss when you’ve been your own boss for some time. You’ll get back into private business, but rejuvenated, with hard-learned lessons and redefinitions.
Prepare for the next Business opportunity
Whether you decide to continue in private business or go for a 9-5 job, it would be a good opportunity to branch out more and expand your network. It simply goes without saying that an expanded network of people can allow various opportunities to come your way. You will be able to identify those chances when they come and use your past experience to stick the landing this time.
Don’t fall into the trap of thinking and believing that a business failure is a personal failure. It’s not uncommon at all for businesses to fail once, twice, and even thrice. If anything, it’s a realistic view of how businesses work. Once you clear your mind, get over the failure, and make sure that your financial status is stable, then it’s time to start over again with a healthy and positive attitude.