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Startup Failed? Best Practices to Gracefully Handle the Situation

As much as we’d like to hope otherwise, the majority of startups fail within the first five years of launch. There’s just no way around it. It’s just a consequence of innovation and of having the opportunity to try new passions. Very few startups reach Y Combinator, and most of them don’t see themselves flashing the unicorn status badge.


Not many first-time entrepreneurs get to launch their small businesses succeed. Most of them struggle to secure their position in a funding round or couldn’t get the product-market fit right. The most important thing that you can learn from your failed first startup is that it offers lessons that could help you launch a successful business one day. Another crucial thing to remember is that you must process the failure of your startup in a corrective and constructive way.

Here’s the most important thing you should understand from a failed startup: It’s one thing to acknowledge and accept things didn’t quite work out in your favor, and another entirely to give up and shut down the company forever. But, if you somehow get yourselves to bounce back from a failure, you haven’t been defeated. And losses of these kinds are just how you’ll future-proof and lead the way to success in your business.


Your failure in your first startup doesn’t mean you can’t try again; it’s an integral part of the process. Don’t think you can’t build a successful business again. We often come across successful startup launch stories but seldom hear a story about a failed startup and how it rebuilt it. Moreover, as a society, we need to stop considering failures as negative things.


Best Practices That Help You Recover From a Failed Startup

There are several things a business owner can undertake to position themselves to bounce back from a failed startup launch. They are:


  1. Accept and Identify: The first and foremost step to managing grief is acceptance, so keep that in mind as you break down what went wrong. Don’t be startled if you find your co-founder, team members, or even yourself having difficulty admitting what happened. Most business owners and entrepreneurs struggle to effectively use networking sites, secure a position in the funding round, maintain enough cash flow, etc. Don’t dwell too much on any number of problems. Businesses fail. Do not blame others. Just focus on what you can take out from this failure and can learn from this situation. What every entrepreneur needs to do is to look at themselves constructively. Think about the factors that contributed to the startup failure and how they can be avoided.

  2. Take Lessons From Past Failures: You may have faced failures in your personal life or past businesses. This is the right time to recall them is to lift yourself after a startup failure. The main reason for this is that your past failures become the most powerful motivator than any other entrepreneurial story about Apple, Tesla, or any other small business.

  3. Note Down the Accomplishments and Work on Polishing Them: Your failure may be your best teacher; however, people don’t wait to gravitate towards the negativity. Think of all your accomplishments to avoid this “natural” feeling of negativity. Have you raised venture capital for other businesses? Have you been an investor in another company? Do people recognize you for your accomplishments? Note down all these accomplishments and go through them whenever you doubt yourself. Then, keep doing it until you find a way out of this particular storm.

  4. Take a Break: Take a break; go hiking, travel, recharge yourself. Do whatever it takes to raise your spirit. Take a couple of weeks off business work and dedicate your time to your creative hobbies. Read. Write. Take your employees on a group retreat. Focus on building the team spirit, and try to leave the failure of your startup behind.

  5. Plan Again and Again: Now that you have come a long way and had enough time to recover your spirit, ask yourself: What did I learn from this failure? If your startup fails because of the wrong product-market fit even though you had raised a lot of money in funding rounds, focus on product development on your next early-stage startup. Keep that in mind, make a new plan — a powerful and actionable plan that touches all the pain points and ensures you don’t experience the same setbacks this time around. However, you should be open to facing new challenges and that it is just a part of the game. Last but not least, remember that people who aren’t failing aren’t trying to break the barriers and hence are losing by default. All major tech companies such as Facebook, LinkedIn, Microsoft, etc., still face minor setbacks all the time, and it’s completely OK. A minor setback in your early-stage startup is the special potion that helps you polish and fine-tune business aspects for potential success in the future.



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