Some might find this curiously paradoxical to what entrepreneurship is all about. Don’t we start businesses to profit from it and to make lots of money? Yes, profit and wealth are indeed desirable end-goals of starting-up. However, given that 9 out of 10 businesses fail within the first year, one would suspect “failing” to be a curiously frequent occurrence amongst entrepreneurs.

Most entrepreneurs know the sweetness of success - more so when all their previous start-ups had failed before. All too often, we celebrate the successes of spectacular entrepreneurs, ignoring the fact that they may have failed many more times before.

Our society frowns on failure - from young, our parents had drilled into young Singaporeans that to fail in school is to fail in life. Our future seemed to hinged on us passing every single exams with flying colours. Unfortunately, we discover later in life that academic excellence doesn’t necessarily translate into real success professionally.

I beg to differ - in failing we:

• Know what not to do (business wise)
• Know who to trust (and who not to)
• Learn who our friends are (and who are not)
• Test the resilience of our mission

Here are some tips to on failing:-

Business Lesson: Plan to Fail

Business gurus call this contingency or business continuity planning. The best laid plans of mice and men will still fail. No matter what happens, as entrepreneurs, we have to plan for the worse case scenario.

When i got Genie in as an investor, i made it a point to tell her what to do in the unlikely case that anything happens to me. I told her where the customers info are kept (soft and hard copy), where the project files are stored, where the backup tapes are, where to dig out access codes to all our server info and how to carry on the business without me.

At that time, Uzyn was still employed under my company - and was the most capable of all 3 programmers - and in a way, i bequeathed the responsibility of carrying on the business (programming and web design) to him. If i should die, the customers and outstanding projects can be carried to completion.

Other strategies we could use to buffer the negative impact of loss of key personnel are:

• Financial strategies such as a key-man insurance policy to counter possible loss of income
• Business automation as much as possible to ensures that operations carry on under minimal supervision
• Customer care - who would take over the client base should the company closes down.

There’s no one magic pill strategy for planning to fail. Your combination will depend on the type of business (service oriented or retail or manufacturing), the financial strength and the resources available to you. One suggestion would be to critically examine the possible failure points & fault lines that could fatally damage your business AND plan to mitigate / lessen its impact.

Next: Part 2 - Fail early