How Studying Failure Makes Business Owners Successful

Failure in business is a given. Sometimes your product launch never gets off the ground, or that cookie recipe you hoped would make you more famous than Amos offended the palette of the wrong critic, or the book you wrote didn’t interest readers. It’s why 25 percent of new businesses fail within their first year and 44 percent never survive year three. Managing the inevitable failures we encounter as business owners and entrepreneurs can be both our greatest challenge and our single best source of inspiration—because succeeding in business isn’t about calling it quits when the going gets tough, it’s about snatching a critical takeaway from the jaws of defeat, then using it as a navigation tool to drive your next success.

If you know some of the most common ways businesses fail, you can avoid putting yourself in these situations in the first place. Here are some tell-tale mistakes to be on the lookout for:


In the beginning, any growth is good growth, but one of the fastest killers of budding businesses is rapid expansion. Think of it this way: when you started, you developed a great product or service by putting tremendous time and effort into its creation. You nurtured it from idea through launch, and when the marketplace responded enthusiastically, you naturally rushed to build out your line. Nothing wrong with that. The trouble is, as you grow, you no longer have the time and energy available that you had for your first launch, so—in your rush to scale up quickly—you add too many variables into the mix, and pay a heavy price for it.

Daniel Lubetzky, Founder of KIND Snacks, knows all too well what happens when business growth outpaces capacity for change. As Grasshopper’s Off The Ground blog reported in June, Lubetzky’s first food line, Moshe & Ali, began with a sun-dried tomato spread. But rapid expansion led to “many new spreads being added to the line that didn’t match the quality (or the brand’s initial focus on Mediterranean-inspired flavors.) As a result, sales suffered, and the brand shriveled up.”

Lubetzky’s take away from that experience was to stay focused and true to his brand, a lesson he’s applied at KIND Snacks. According to the Off The Ground article, “Within the first year, he made over $1M in sales. Today the company employs more than 500 individuals and has an endorsement deal with pro basketball player Kevin Durant.”

Short-Sighted Management

It’s one thing to have a great idea and run with it, but business is business. That means, to be successful, you’ll have to manage it wisely. Planning and management go hand-in-hand with success because they help us avoid—and quickly correct—mistakes that might otherwise wipe us out. These mistakes come in many flavors, but the most common include poor planning, overcapitalization and denial. Some business owners simply don’t do their homework; as the saying goes, failing to plan is planning to fail. Others sink so much cash into their operations—office space, equipment, property, etc. —that the well runs dry before they even start to generate revenue. And then there are the deniers, those bright-eyed optimists who know they have a problem on their hands, but can’t bring themselves to address it until the problem swells into an irreparable crisis.

The good news is that these issues are avoidable. Start with an honest assessment of your management skills and practices, and adjust accordingly, bringing in experts when needed.

Not Putting–and Keeping–the Customer First

For businesses large and small, there’s no bigger blunder than failing to take care of the customer. Business owners and entrepreneurs who don’t walk the talk (i.e. – fail to deliver as promised) can—and should—expect their customers to seek out better options. The same applies to managers and employees who abuse, mistreat or disrespect customers—because you won’t have a business for long if you don’t keep the customer front and center.

As Mahatma Gandhi said, “A customer is the most important visitor on our premises; he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”

Although there are many other hurdles that business owners must routinely clear on the track to success, being mindful of the three referenced above will help form a foundation for understanding through which smaller blunders can be quickly spotted and avoided. By grasping the nature and role of failure in business, your own pitfalls should become more manageable, and the road ahead, less daunting.

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