No company really wants to think about failure. Even so, it is definitely a thought that crosses the minds of owners and executives. Businesspeople take steps to avoid failure, but not address it. But business consultants and veteran investors are strongly advising companies to consider failure.
Statistically speaking, most new businesses fail. Of course, no company sets out to fail. Thinking about failure early in the launch of a company may actually help it prevent a disastrous end.
Here are the reasons why business experts tell companies to keep failure in mind and avoid it:
No One Can Predict the Market
Here’s the open secret about doing business during any time period: the market is wholly unpredictable. No one, not even the savviest businesspeople, can predict the future. A business that may be successful today could be going bankrupt tomorrow. Remember the Lehmann Brothers collapse in 2008? No one thought that was a possibility a year ago.
These days you can read about big-name retail businesses closing stores because of online competition. While that has been a concern for several years now, the impact has stunned many retailers. Likewise, the market can twist and change in unpredictable ways, warns veteran investor Jason A. Sugarman. Therefore, failure should always be considered a possibility when doing business.
Have a Plan to Do a Quick Course Correction
When companies consider failure as a possibility, something interesting happens. Any sensible managing executive would make a plan to face failure head on. Most businesses that analyze routes to both success and failure alike are in a better position strategically speaking to fix mistakes.
If the company is on the wrong path, which ends in failure, being mindful of the possibility will allow the business to change course quickly. Therefore, don’t just think about failure, but also consider the challenges that might lead to it.
Being ready will allow you more control of where your business is heading.
There Must be a Strategy to Address a Future Crisis
Businesses shouldn’t anticipate eventual failure, of course. Companies that address the possibility put plans in place to fix future crises.
Do you know what would happen to your business if the demand suddenly drops, or if a competitor from a different sector surpasses your business? You should, and then you should have a strategy in place to manage the problem.
Many of the retailers facing stiff competition from Amazon these days are closing physical stores and are making the transition to online shopping. That’s one way to handle a market-oriented crisis. Likewise, anticipating problems in advance will help your company solve them without being run to the ground.
Mentally Prepare Yourself
Perhaps most importantly, thinking about failure will allow you to mentally prepare yourself for the possibility. Being calm and cool in the face of disaster is the only way to overcome it. When you know what could be in store, you would be better prepared psychologically to rescue your business if the time comes.
Hopefully, your business might never fail. “Hopefully” is the key term here. Therefore, think about the issues here and prepare yourself and your company for the possibility of failure.