As a business owner, failure is one of the scariest and most realistic outcomes for a new business. It is well known that most businesses do fail in their first 5 years. A common business owner mistake is being terrified of failure and making business decisions based off of those fears. While it’s understandable to be scared of failure as a business owner, there are some common mistakes that business owners make when it comes to fearing failure. For example, you might be so afraid of failing that you won’t even start your business in the first place, or you might avoid taking calculated risks that could help grow your business and keep it alive in the long run. Many business owners will be worried about investing in things like search engine optimization or pay-per-click to the point that it hurts the growth of their business both immediately and long term.
Making important business decisions based on your fears
There are numerous reasons why a business owner might feel anxious about making a particular decision. In some cases, it could be valid, such as taking on debt or incurring additional expenses. In other instances, however, fear-based decisions can be detrimental to your business. If you find yourself paralyzed by your fears of failure and make choices based on those fears—rather than weighing all possible risks and rewards—you’re unlikely to succeed. It’s always worthwhile to make a well-informed decision rather than one based on fear or uncertainty. Remember: actions have consequences—and not acting has an impact as well! There is no perfect decision; just ensure that you understand what yours will mean for your company’s future.
Calculated risks are typically well worth taking if you can envision a clear path to the desired end result. Although it’s impossible to predict every possible outcome, consider whether your potential gains outweigh your potential losses for a particular decision. If you believe they do, make a plan and commit to that choice. You’ll likely learn something along the way—and your business will be better for it in the long run. Think of calculated risk-taking as an investment in yourself and your company, not an expenditure that could easily be wasted on unnecessary worry or anxiety.
It is common for the fear of failure to lead to indecision or inaction. Once you decide on a plan, implement it immediately and do not second guess yourself. All business decisions you make have risks from all aspects of your business. Hiring the wrong person can be detrimental to your business growth, choosing the wrong marketing company can have long lasting negative impacts on your business and so on. However, indecision can be much more costly to your business.
Focusing only on the negative consequences of taking action
Focusing on the negative consequences of the choices you make as a business owner is an important part of running a business and an important aspect to focus on. However, some business owners focus so much on the negative risks that they forget about the potential benefits of those decisions.
Well researched and educated decisions are important in order to make the right decision but focusing only on the negatives will hamper that process. I have met a few business owners that have spent enormous amounts of time making decisions on business issues that really are minor both in the short and long term.
Business owners have to prioritize what their efforts are focused on and also prioritize what their time is spent doing. There are endless tasks for most business owners but you can’t give equal amounts of effort to every single one because if you do you will spend all your time working instead of leading your business. As a small example, just creating an incredible logo for your website that no one ever sees or even cares about is not where you should be spending your time as a business owner if there are more important issues in your company.
It is natural to focus primarily on the negative results of the decisions you make and it is wise to think them all through. However, it is equally important to focus on things that will be positive as well for your company. There are a few small things you can do to make decision making easier. Below are a few examples of things most business owners find as effective tools (and usually common sense tools) in order to make the correct decision and not decisions based on fear.
Detailed list of the negative and positive effects of your decision
The easiest way to make a decision, an educated decision compared to an emotional decision is to make a list which goes over all the potential positives and all the potential negatives that can result from this decision. We suggest only using this detailed method with major business decisions – the time and thought put into it should not be placed into relatively minor business decisions.
Here is a list of things you need to consider while making the list:
1) What are the long term potential impacts on your business?
2) What are all possible outcomes? Be as realistic as possible with your estimates.
3) Which of these outcomes do you want to happen and which ones don’t you want to happen? If a certain outcome is very important, put it at #1 or #2 on your list, write down Very Important, then further define why it’s very important.
4) How confident are you about each outcome?
5) What is the financial investment needed and what is the possible return on investment?
6) What is your experience and expertise in doing such a task?
7) What else do you need to consider with such a decision, employees tasks, new job roles etc?
8) Is this a new service no one else is offering – what will the budget be to increase awareness?
9) Is your competition doing this? If so, how well does it appear to be working with them?
10) What is your gut instinct? Usually your gut instinct is right when you are not sure one way or the other.
It is important to spend time and effort in making wise business decisions and equally important to not allow the fear of making decisions keep your business from expanding.
Letting your emotions run wild
Successful business owners have a strong desire to be successful. They work hard and smart to achieve that success. A common mistake business owners make, however, is letting their emotions run wild during times of stress and failure. Remember: if you’re going to allow your fear of failure keep you from doing something new or taking a calculated risk, then you might as well not try at all because as long as there’s life there’s always a chance for failure. In other words: it isn’t your job to ensure your success, but it is your job to give yourself every opportunity possible to succeed!
Refusing to focus on the future
Your current business is doing great but can generate more income if you decide to offer a new product or service. Another common mistake made while being afraid of failure is refusing to focus on the future and possible additional sources of income. Many business owners are happy with their current level of income and are okay with things staying on this path. The largest issue with this is that markets change, customers change and every day there is more and more competition. It is important to ensure your businesses success by focusing on the future and providing as many avenues of revenue as possible that you can be successful at.
Amazon is really one of the best known examples of this. They started as an online bookstore and their competitors (large bookstores) refused to even acknowledge them as competition. Those businesses are now out of business and Amazon is currently one of the largest and most profitable companies in the world. The important lesson with Amazon is they were not fearful of taking risks and they were willing to change their business model to expand. Amazon started off as a bookstore and decided to have other streams of revenue. They are unique of course but the concept can be applied to all businesses – never be happy with your current situation and always seek additional sources of revenue by focusing on providing a service or product that is in demand or should be in demand.
Failure in business is common and important for your growth
Successful entrepreneurs understand that failure is not a permanent condition. That’s because they know how to treat it as a temporary setback and move on from there. In fact, studies have shown that entrepreneurs can be more successful if they’ve experienced failures first-hand before becoming an entrepreneur. The smart ones fail early and often, and learn enough so that later on they don’t make those same mistakes. Smart entrepreneurs should look at failure as something to be embraced – one of their best learning opportunities – rather than feared. They realize it makes them stronger and better equipped for future success.
Failure also leads to better short and long term business decisions specifically in reference to expanding your business. There is no possible way to know what will grow your business unless you try it. You have to get out there, experiment with advertising, pricing, new services or products that could help move things forward for your company. By doing so you put yourself at risk of failure, but by taking risks you get more chances at success.
As a business owner I always take calculated risks knowing that for every 5 failures I was sure to get one success. The revenue generated by that one success always heavily outweighed the cost of the failures. That proved to be true over and over and is common amongst most businesses. The concept of putting all your eggs in one basket goes both ways. If you do not take risks in growing your businesses all your eggs are in the basket, hoping that there will be no new competition, no new services that will benefit your company and that your current and unchanging business model will be relevant 10 years from now.
In Closing
Failure is a natural part of business and an important part of business growth. Business owners that are afraid of failure tend to be the ones that fail because they are unable to make decisions in a timely fashion. The best way to fail at business is the fear of failure and letting it impact your day-to-day business decisions along with long term strategic decisions. Focus on the future and understand that failure is a part of business growth. There is no company that hits a homerun every time they swing – but it is easy to focus on just the homeruns and ignore everything that got you to that point.
Written by David Phillips, CEO and Founder of SayWhat Consulting. With over 20 years of experience, Mr. Phillips has consulted with small, medium and large businesses in marketing, SEO, PPC, business management, staff training and day-to-day operations. SayWhat assists clients in numerous industries including cosmetic surgeons, plastic surgeons, med spas and attorneys in family law and criminal law. We also assist other industries as well and our primary clients are small and medium sized businesses.