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Whether due to COVID-19 or other factors, watching your small business flounder is never easy. But while the failure of a business you poured your heart, soul, and money into is painful, closing a business doesn’t need to mean the closure of your entrepreneurial career. Here’s how entrepreneurs can get back on their feet and onto the next venture after a startup fails.
Take Time Off
Time to clear your head is essential after a business closes. Use this time to reflect on your successes and failures and think about what you’d do differently the next time. Seek honest input from stakeholders to assess your business’s strengths and weaknesses and determine the factors that led to failure.
While reflection is important, don’t spend all of your time working or mulling over what-if’s. You also need time to unplug, practice self-care, and reconnect with yourself. Starting and scaling a business can be all-consuming, and it’s important to recenter yourself before diving in once again.
Get Your Personal Finances in Order
The failure of a business can also be devastating to an entrepreneur’s finances, as many small business owners use personal funds to get their business off the ground. What’s more, Nolo explains a business bankruptcy might affect your credit score, depending on how it was set up. Repairing your credit involves paying off debts, especially if you owe the IRS, and you might apply for a secure credit card to help rebuild your score. According to Vermillion, it’s also wise to implement a financial self-care routine, not just for your budget but also for your peace of mind.
Reach Out to Business Contacts
Reaching out to your network after a business fails takes humility, but it’s an important step in rebuilding. Instead of feeling ashamed of your business’s closure, accept failure as part of the entrepreneurial process and talk openly about what went wrong and what’s next. You may discover some of your business contacts have similar experiences to share or discover a new opportunity that you wouldn’t otherwise know about.
Decide What’s Next
Some entrepreneurs can’t wait to test their next business idea, while others prefer to step back before re-entering the fast-paced world of small business ownership. Here are three options to consider as you plan the right move for you.
Launching a new business
If you have access to financing and a tested idea, there’s no reason to delay your next business venture. It is, however, essential to dedicate time to developing your business plan. Without market research, prototype testing, and other crucial planning steps, as GrowThink explains, history is bound to repeat itself. Identify things like where you want to be in five years, steps to reach that goal, and measurable milestones. With a solid foundation, your chances of success are much improved.
Starting a home-based business
If you want to limit risk going into your next business, consider a home-based business rather than a traditional brick-and-mortar operation. Home-based businesses have lower operational costs, allowing you to start a venture with less money. However, you may have to work harder to have your business taken seriously, including setting regular business hours and investing in digital advertising. You’ll also need a dedicated space where you can focus and be productive, so make a point to carve out an area in your home where you can comfortably work without distractions or limitations.
If you feel like you need more time to learn from past mistakes, pause your entrepreneurial career and return to the full-time workforce. Think about how you want to present your experience, shedding things in a positive light. While resuming your day job can feel like an admission of failure, it’s better to take things slow than it is to jump into a new business venture before you’re ready. Returning to the workforce will give you time to rebuild your savings and fill gaps in your experience so you find greater success the next time you launch a business.
Recovering from failure isn’t easy — financially, professionally, or emotionally. But for entrepreneurs, it’s all part of the process. Instead of viewing your business’s closure as the end of the road, learn from your mistakes and use your experience to build a stronger, more resilient business the next time around.