How do you know when failure means it's time to quit?

From childhood, we’re taught to keep trying. By the time we enter a business environment, we should be experts at learning from our mistakes. Sometimes, though, we fail. Our businesses fail too. So how many business botches should we be prepared for? And when is it time to call it a day?

There are many types of business failure, and no one can avoid them all. That’s why entrepreneurs must be so resilient. There are day-to-day failures, like that meeting you wished you’d handled better. Though frustrating, they’re rarely insurmountable. Bigger let-downs, like product fails or the winding up of a business can be harder to move on from.

It’s impossible to say how many of these you’ll encounter. What is certain is that there’ll be another opportunity, even if you have to create it. So you can try again as many times as you like (or can afford). But is there a point when you should admit defeat? A point when failure stops being a learning opportunity and becomes simply a predictor of future failure?

A matter of timing?

There are many things to consider if you’re wondering whether to give up. Your finances, motivation, feedback you’ve had so far – they’re all worth pondering. If any of these has slumped into the negative, you’re probably questioning your capacity for success. Or you might be having doubts because of a generalised feeling of impatience, lack of fulfilment, or disappointment at the realities of entrepreneurship.

Either way, it’s likely that these issues are cropping up in the 'messy middle' of your business – to quote Rosabeth Moss Kanter, a Harvard Business School professor.

Kanter observes that entrepreneurs tend to be inspired and energised at the beginning of their journey. However, she describes a point in the middle when the hard work and challenges take hold, and funds and support dwindle. This, she says, is when 'Kanter’s Law' applies: "Everything looks like a failure in the middle."

Money running out is a key reason for failure – and Enterprise Nation’s Home Business Report states that almost one-third of new UK businesses are now started alongside a day job that pays the bills. 

Read more: Why entrepreneurs should embrace failure in 2016

Sweet success

Josephine Fairley did just that when building chocolate company Green & Blacks and advises all start-ups to do the same. Having a steady income might give you the flexibility to stick with the new venture instead of giving up too soon. Do that, she says, and "by definition you create a failure". 

Everything looks like a failure in the middle.

So, to answer the original question: the point when failure ceases to be a learning opportunity and becomes simply a predictor of more failure is the point at which you stop trying, for the wrong reasons. Of course, you won’t always feel energised to work on your business, but successful entrepreneurs push through this.

Tina Munglani, Director of Sugar Mill Desserts – a start-up she describes as "a new breed of dessert-led restaurant" – describes it as "realising that you are doing this not only because you truly believe in your product, but also because you have the guts to overcome any resistance and push through your darkest moments with no security ahead".

Read more: Richard Branson's greatest failure

Good reasons to call it a day?

But what are the right reasons to stop? Kanter outlines 12 guidelines for deciding whether to persist or quit. It seems there is no 'healthy' failure rate (or even an average one) because it depends on individual circumstances. 

The type of failure and area of business add yet more variables. Smaller failures may not be as costly as bigger ones, or have such significant knock-on effects. Failures in social enterprises seem taboo, with this sector traditionally tight-lipped about anything other than resounding success.  

So instead of worrying about whether to pull the plug, why not spend your time more wisely? Before you seriously consider quitting, try:

  • Focusing on the small successes.
  • Learning more about your business area – bearing in mind that retail magnate Theo Paphitis said: "The reason people fail is because they don't do their homework". Tina Munglani agrees: "I spent eight months doing my 'homework' before Sugar Mill started trading and I’m still learning."
  • Doing things differently – like harnessing new technologies.

The good news

If, as Theo Paphitis believes, the number of failing start-ups is unacceptably high, where’s the cause for positivity? Well, if so many businesses fail, yours must have a good chance of success if you just keep at it.

As Tina Munglani says: "Long-term success stems from continuous learning, improvement and adaptability. You learn that while you may be worrying today about how you will pay your staff during a slow month, you need to stay positive and confident while continuously looking for solutions. I love the quote by Steve Martin: 'Be so good they can’t ignore you'."

Useful words to remember when you’re trying again with your current business or starting up a(nother) new one.

​​This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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