How To Start A New Business After You’ve Failed Before

Winston Churchill was right that “Success consists of going from failure to failure without the loss of enthusiasm.” Every successful business out there can relate to this statement.

According to the U.S. Small Business Administration, 50% of small businesses go belly up before celebrating their fifth anniversary, and only 33% will have their doors open ten years down the road. Lack of financing and inability to access small business loans is cited as the top reason why most start-ups fail.

This shouldn’t scare you at all. The point is, not every new business venture becomes a success story. Thus, you should become comfortable with failure if you want to succeed in business. It leads to the question:

How do you start a new business after a previous one fails? This article walks you through the four steps of a business comeback. Read on to learn more.

4 Practical Steps To Jumpstart a Failed Business Idea

Take Time To Grieve Positively

After a hard fall from grace, your mental and emotional needs come first. Yes, it’s devastating to end up with failure after a period of hard work and the excitement of being an entrepreneur. But don’t allow yourself to sink into depression, anxiety, or experience burnout. Spend some time with yourself, friends, and family so that they can help you embrace a forward-thinking attitude.

Read stories of successful entrepreneurs like Steve Jobs who went through crushing failure but finally found the motivation to turn their failure into success. Again, join a support group of successful entrepreneurs in your niche who can give you practical advice and point you to the best places to get small business loans to fund your next business idea or jumpstart the failed one.

Your takeaway: Take some time to heal and rediscover your motivation. Don’t sink into depression.

Evaluate Your Failure

Once you heal, start evaluating what went wrong with your business. Honesty is the keyword when carrying out a post-mortem of a failed company. Appreciate that you made some choices and took some actions that made your business hit moot.

For instance, you entered into a price war with your competitors, mismanaged business finances, or couldn’t secure a small business loan to cover a cash crunch or purchase inventory on time due to bad credit history.

Whatever the reason, be honest with yourself, learn from your mistakes, and let go of the past. Then, incorporate those lessons into your next business venture.

Your takeaway: Evaluate why your business failed, learn the lessons, and move on.

Nail Your Finances

Bills and creditors’ calls won’t start coming. You’ll need money to fund your immediate financial obligations, pay your past creditors, and build savings for your next venture. It isn’t advisable to take out a small business loan to fund these expenses or jump into another business right away. Savvy entrepreneurs navigate this phase with a job. They reach out to their networks to get a job or a side gig as they buy time to think about the next big thing.

You may choose to work for your big competitors to learn their ways or go back to class to learn and build up knowledge on areas that led to your past failure. For instance, you may decide to take a course in business management. Some entrepreneurs get their next business ideas from the jobs or courses they take immediately after the first business fails.

Your takeaway: get a job to meet your immediate financial needs as you think about your next business idea.

Get A New Business Plan

The last step is to reinvent yourself. Once you heal, learn, and have something going to meet your immediate financial needs, it’s time to start planning a comeback. Don’t allow your first business crush to hold you down. You are now wiser and experienced enough to reinvent yourself!

Figure out the next business idea that aligns with your passion and newly found expertise. This time around, write an in-depth business plan documenting your vision, business desires, marketing strategies, problems your business will solve, and how to avoid past mistakes. 

Your business plan should also include your business niche, target audience, ways to beat your competitors, revenue projections, and how to obtain small business loans to fund your next venture. Then go for it!