Your business is a flop.
These words are every entrepreneur’s worst nightmare. These words can be replaced with:
Your business is bankrupt.
Maybe you should throw in the towel.
These words sting, and I can tell you that from a first-hand basis. Over the years, I’ve had multiple businesses fail on me. But for every failure, I’ve gained priceless knowledge and insight which has helped me in my next venture. The key is to not give up. Keep yourself motivated and focused as your push on to your next venture. For example, one of my first ventures was an online social network allowing high school and college students to connect…no, not Facebook. The company was called Collegetacts, and it was a colossal flop after 3 months. My biggest issue was that I couldn’t find the right mix of incentives to attract users to the site. However, out of this experience, I learned two important lessons: First, I learned how to build a website using a web design platform. Second, I learned how to tap into the power of a personal network. In order to secure initial users on the site, I reached out to all my contacts via email, Facebook, and phone calls urging them to join the site and support my business. Despite my initial fears of failing and looking like a fool, I took a chance which initially paid off as I secured my first 100 users to the site within a few days.
For my next venture, I looked to build a platform allowing video gamers to compete and wager against each other. Although seeing big potential in this business, the venture flamed out after 5 months. Again, two very important lessons were learned. First, choose your business partners wisely and make sure they are fully committed to the business. If their heart is not in it, it is time to let them go. Additionally, friends and/or family may not be the best choice, and as other entrepreneurs can tell you, it can be a source of headaches (and potential ending of relationships) down the road. In my case, my business partner was not putting enough work time into the business. The second lesson I learned was about the importance of proper regulatory/licensing research before launching your business. Make sure you understand the current regulatory environment facing your venture as well as an idea of where the industry is heading. Wagering and online gaming was increasingly coming under government scrutiny which ultimately hastened our decision to shutter the business.
Not all business is bleak
Before I start discussing how to leverage lessons learned from failed businesses, I would like to introduce an entrepreneurial strategy I’ve embraced called location arbitrage. Location arbitrage is taking a product or service that works in one location/city and introducing it to another location/city. Some entrepreneurs might say that innovation is removed using this strategy; however, I disagree. Innovation still plays a factor as you have to reverse engineer the business to ensure it functions and is successful in the new location. To clarify, I am not referring to franchising a business since you are not sharing profit with the original entity. The two ventures below are examples of location arbitrage.
On to my first successful venture – importing clothing from Italy, retailing it online, and distributing it across the world. Using the skills gained from previous failed ventures, I was able to design the website quickly, spread the word to my social networks efficiently, and choose the right business partner to ensure the future success of the company. There was one piece missing though…effective marketing. Most (though not all) businesses require consistent and successful marketing efforts and campaigns. Create your marketing plan before your business is launched. Analyze your business to determine the most effective forms of marketing (i.e. online, print, billboard, TV, special events, etc.) as well as your target customer segments. This will help move the needle to ensure you have sales coming in the door on Day 1.
As you learn lessons from your experiences, you will be able to better prepare for and make decisions down the road. The final venture I’d like to tell you about incorporates each of the lessons I have described above. Back in 2009, I started a specialty transportation company in New York City specializing in trolley rentals. Significantly more capital was at risk in this venture yet I was confident (for the most part) due to my previous experiences and knowledge. Seven months after launch, the company was profitable and has been ever since. However, the success did not come without its own share of crises. Twice the company almost failed – once due to unavailability of insurance and the other time due to the lack of reliable employees/drivers. However, I was able to resolve both of these issues and have learned from those experiences which will help me prepare/avoid them if they occur in the future.
In parting, I would like to pass on some advice that has helped me over the years. First, always keep learning and incorporating lessons learned from your experiences. Secondly, do not get discouraged when a venture fails. An exercise I highly recommend to drive motivation and focus is to write down your goals (both long-term and short-term) on a piece of paper and hang on a wall (or somewhere where you will see them daily). Make sure your goals have a measurable result and a target date to make them as concise as possible. Use these goals to motivate and energize you on a daily basis. Finally, never give up and remember – your next successful venture may be just around the corner!
Dave Pike is the founder and CEO of the New York Trolley Company. He enjoys travelling, meeting new people, and vacationing on Lake Michigan. To learn more about the New York Trolley Company, visit NYTrolley.com
Image Credit: www.tanveernaseer.com