Thousands of entrepreneurs have used it as a launchpad to future success

Society has a very harsh view of failure and frankly it’s unfair. 

Broadly defined as a lack of success – for businesses, failure can manifest itself in many forms, ranging from financial losses and market share decline to reputational damage and eventual closure. 

This definition does not take into account the real and tangible benefits that arise from these processes and lessons learned by directors and business owners along the way. 

Learning from mistakes and having the chance to do better in future is how businesses grow and become successful and it might take more than one try to find the perfect balance and approach. 

Business failure is not the end

In the latest figures from the Insolvency Service, 1,769 companies became insolvent in January 2024 – up 5% year on year. But although insolvencies are high, Companies House data confirms that there are more entrepreneurs starting businesses in the UK than ever before with over 900,000 new ventures launching in 2023 alone. 

According to surveys of business leaders, founders and entrepreneurs, almost a third (31%) of business owners admit to having at least one failed business on their CVs. Of these who have had their business fail in the past, 16% stated that they’ve had more than one business failure.

Almost half (47%) of business owners surveyed said their previous experience of starting a business has helped make their current one a success. 

Looking closer at the reasons behind business owners’ and entrepreneurs’ business failures, almost a third (31%) closed the business down because it wasn’t successful.

A quarter (24%) sold the business on to new owners, almost one in five (18%) business owners merged a failing business with a different one, 15% ceased trading and wound the business up and 13% said that they passed over control to a relative. 

Business owners have to contend with many difficult situations including economic uncertainty, rising interest rates, high inflation, shifts in consumer behaviour, supply chain disruptions, and even regulatory challenges and changes.

Entrepreneurs who have failed at least once 

Some names that you would associate with wild business success have happily acknowledged the part that previous business failures played in their path to ultimate achievements.

  • Walt Disney 

In the beginning of his career Walt Disney lost creative control of his first character Oswald the Rabbit following a contract dispute with Universal Pictures. Following this, MGM rejected his Mickey Mouse character because the studio believed women were afraid of mice. 

When “Pinocchio” first entered theatres, Disney hired several people to stand up on top of the marquee dressed as puppets to wave as people arrived. He provided food and wine for them throughout the day but by the time the screening began they were drunk and swore at the crowd! 

Despite these and other numerous struggles and setbacks he experienced in his early career, Disney overcame these and turned Disney into a global empire, pioneering several new animation and filmmaking techniques that revolutionised the industry as well as creating the idea of the destination theme park too.

  • Arianna Huffington 

Arianna Huffington launched one of the most well known and most frequently visited news sites on the internet, The Huffington Post. But that doesn’t mean she didn’t face her fair share of setbacks throughout her career to reach that accomplishment. 

Before founding the infamous site, she published two books. However following completion of the second she received rejection notices from 36 publishers. 

Ms. Huffington also ran for governor of California in 2003, receiving less than 1% of the popular vote. However she states that her failed political campaign taught her the power of the internet, helping her with the creation of her website which she eventually sold for $315 million to Buzzfeed.

  • Bill Gates 

Bill Gates and his friends founded Traf-O-Data, a system which logged the raw data from roadway traffic counters and created reports for traffic engineers, government officials and others individuals who required the information. 

Although the concept ultimately failed, the project gave Gates and Paul Allen the experience and skills they ultimately needed to create Microsoft’s first line of software products a few years later.

And whatever happened to Microsoft?

For some companies, business failure might mean having to close either voluntarily through a Creditors Voluntary Liquidation (CVL) or they could be forced by creditors through a Compulsory Liquidation

It is important to note that not all company closures are ‘failures’. A business owner may choose to close their business via an Members Voluntary Liquidation (MVL), a voluntary closing down process for profitable businesses if they decide that they want to move onto something else. 

They may view a profitable company as a failure because it didn’t achieve their ultimate objective or they had to change course to achieve profitability and not fulfil their eventual mission.  

Business failure doesn’t have to signify the end of your journey but rather an opportunity for learning, adaptation, and growth for the next chapter.

We offer a free initial consultation to any director or entrepreneur to discuss taking their next steps which will hopefully allow them and their business to evolve, refine their approach, make necessary changes to ultimately thrive.