How many entrepreneurs that succeeded in their first attempts to build a business do you know? What about your specific industry? The truth is that 90% of all startups fail (eager to know why? Read about the most common reasons why startups die in this article). It doesn’t mean that this fate is inevitable. Nevertheless, the chances are very high, and you have to deal with that.
In this article, we’ll focus on what you should do in case your business has failed, and you are not willing to give up (are you?). It will be even more useful to read if you are just starting to build your startup and want to get fully prepared for all the scenarios.
So, here we go…
#1. Analyze Your Business Failure
This is the first thing you do when something happens the wrong way. Analyze what things have led to this event and what should/shouldn’t be done in the future to avoid the same result. Even if the reason is something outside – a major client has terminated relationships or you’ve been outcompeted, it will be useful to review your business plan, think of the backups you could have made, take a look at your strategy and the team, etc. This will help you not only find your weak points but also give valuable lessons you’ll need for starting your next undertaking.
You could also spend some time studying other startups’ post mortems or consult an advisor/a mentor/a more experienced founder to get important guidance and support.
#2. Recharge Your Batteries
Becoming depressed and devastated after a period of hard work, first milestones, and many plans to cover is more than natural. Devote some time to your emotional healing – not just because you need to find new inspiration/ideas/a plan to go by, but also because both your physical and mental health need this.
Take a rest without any work – whatever you prefer to do in your spare time, make sure you really DO that, since it will be impossible to make a new good start with a head full of the same negative thoughts.
#3. Find New Funding Resources
It is impossible to start a new business without proper capital. In case you’ve spent all your savings and have no emergency fund, the best time to start looking for a new reliable source of income is right after your previous startup fails. We hope you do remember that finding a new investor takes time. Even more time is spent on making them want to invest in your business.
We’ve already talked about the best ways to get fundraising in Raising Your Capital: 6 Tips from VentureRocket: approaching investors, VCs, accelerators/incubators, requesting a bank loan, applying for a grant, and more. In case you decide to ask for an emergency loan, make sure you have a plan in place to pay that loan back. Also, remember that many government grants are matching programs. If you decide to go with this option, they can require you to match up to 25-50% of the needed funds.
#4. Work Your Network
Winning new investor meetings through startup competitions seems too time-consuming to you? Or do you want to check other options too? The great and really short way to do that is to look through your network.
Dedicate some time to check and approach your LinkedIn contacts, talk with your old clients, ask them for recommendations (in case you are approaching new potential partners, seek to meet decision-makers), etc.
That said, don’t focus only on people you already know. Increase your chances to meet a matching investor, by expanding your network – attend more networking events and connect with more entrepreneurs there.
#5.Improve Your Team
A poor team is one of the top reasons why all startups fail (read on more reasons why startups die in this article). Even if that was not your case, and you think that your team is good enough, after your startup fails, it’s reasonable to evaluate those ones who work with you, too.
Think of what skills you/your team members still lack. Maybe, there are some important positions (a marketer, a sales manager, a business analyst?) that you didn’t take into consideration when building your company? Or maybe, it’s time to hire a good recruiter who’ll help you find exactly whom you need?
Your team is the core of your business – make sure you fix it if you don’t want to end up the same way.
#6. Build a New Business Plan.
Now, that you know where to find new capital resources and have chosen a couple of good ones to focus on, it is time to prepare your new business plan. Be it an angel investor or a government officer checking your grant application, they all will want you to present your business plan.
In this article, we have already talked about building business plans (see “Make a Business Plan (and Then a Pitch Deck and a 1-Pager)”). You could also read more detailed explanations of a business plan’s structure on bplans.com or download business plan templates here or here.
If the reason for your startup failure was money-related, we do recommend that you make a new business in collaboration with a good consultant. You could also consult an entrepreneur who leads successful startups (that might be even more useful since, most probably, they have already made the same mistakes and know exactly what a good business plan should cover).
#7. Tailor Your Pitch
Approaching new investors with the same pitch deck is like thinking you’ll succeed making the same mistakes. Your pitch deck needs to be improved not only in terms of a business plan you attach to the pitch deck. Most probably, there had been some blockers on your way before you reached your investor. Now, it’s time to reduce them.
First of all, optimize your investor fit, by studying thoroughly exact angel investors and their companies or the organizers of the startup competition.
Next, anticipate the possible questions you may be asked in the meeting and think over your answers beforehand. Most probably, some of the investor’s questions can help you understand what info your pitch lacks or what could be explained in a different, more effective way.
And, of course, prepare a new business plan.
We’ll talk more about the ways to improve your pitch deck in the next article, so keep calm and make sure you check our updates. 😉
#8. How about New Opportunities?
Finally, failing a business may be your opportunity to consider positions at other companies or trying yourself in a new, yet somehow related role.
You have probably heard people saying that when one door closes, another one opens. This may exactly be the case with startups as failing one startup often opens doors to another one. With the acquired experience, you could join a new company as a C-level executive or as an advisor. Many founders also start consulting other startups of the same industry before they get another chance/enough money to make their second try.
At VentureRocket, we help startups find proper investors as well as unite them, together with accelerators, incubators, hubs, and individual members (like field experts, advisors, consultants, mentors, service providers, etc.) into one global ecosystem. We also assist startups in applying for Malta-based government grants to provide them with tested fundraising options.
Explore your opportunities and join the VentureRocket ecosystem here.