F. Scott Fitzgerald famously said, "There are no second acts in American lives." Yet there are countless examples of people who have encountered major setbacks in their careers, overcame those early derailments, and achieved new victories. Many entrepreneurs who have gone through the fire often say that they gained greater insights from their failures than their successes. We talked with three business owners about how to emerge triumphantly from defeat and the hard-won wisdom they acquired.
Look for shared values
After working with the Clinton Health Access Initiative on vaccines in Rwanda and Malawi, Kathryn Minshew co-founded a networking site for professional women. Minshew took no salary as CEO and bankrolled the small payroll with her own money. Less than one year later, the situation turned "toxic" between Minshew and some founding members of the leadership team as they began to have divisive disagreements about the direction of the company.
"When you go into business with people, I think first-time business owners take a lot of things on faith," Minshew says. "You assume other people will react the same way that you do. As long as the agreement is clearly in writing—even though you don't have a legal contract for everything—all parties will stick to it. I saw that not everyone in business operates with the same values and ethics that you do."
As things deteriorated further—the company website was moved and team members were locked out of their email accounts—Minshew felt like she had let everyone down. After some soul searching, she and one of the original founding members decided to leave and try their business concept again. The entire staff from her "failed" venture who supported Minshew during the breakup of the leadership team went with them.
In September 2011, they launched The Daily Muse—known today as The Muse—an online career development platform that gives career advice, job listings, and company profiles. The reboot has garnered positive media attention and has over one million monthly users. Not surprisingly, the sobering experience informed Minshew's perspective and management style.
"As a [first-time] business owner, the biggest mistake I made was not having most of the arrangement drawn up by a lawyer," Minshew says. "It changed the way we deal with people and enter into partnerships now. We're much more careful about not working with people for whom there is a sense that we don't share values."
Be candid about failure
There is a natural tendency to forget about a failure and simply move on—but experts say that acknowledging a setback and analyzing it in the open are essential steps before preparing for your next venture.
"It may be talking with other business owners and getting feedback from them by asking: 'These are some of the things I did. Do you notice anything I did incorrectly?'" says Jeremy Oms, president of New Blood, a California-based company that helps businesses grow through Internet technology.
Being candid with customers—admitting that your product or service is not performing as expected—and soliciting feedback can result in both their support and a potential solution. For example, Oms worked with a client who had created a new deck of high-quality playing cards. But when they came back from the manufacturer, the cards did not live up to the promises of the advertising and generated negative comments from customers. The client was preparing to abandon the product when Oms recommended owning up to the problem and asking customers for their opinion. After one customer suggested tighter quality control, the client followed suit and relaunched the product to great success.
"The one thing to remind yourself is that you're not alone," Oms says. "Even though an idea failed, [failure] has happened to countless other people. Every business idea you have is a great learning opportunity that you can take from and try again."
Have patience and move forward
Many entrepreneurs who have faced failure also have an unshakable belief in themselves and the fortitude to never give up. Case in point: Chris Miles was a successful Utah-based businessman who was able to retire at age 28. Six months later, he came out of retirement and started a company with other self-made entrepreneurs to educate people on financial strategies, primarily real estate investors. Miles and his co-founders were also heavily invested in the real estate market.
By 2008, after the real estate sector imploded, Miles was losing $16,000 a month, eventually accumulating $1 million in debt. Unable to access his equity, which was tied up in property, he began selling off his assets, such as his Mercedes, and wondering whether he could make his mortgage payments.
After a neighbor complained to him that he was having trouble with his own finances, Miles got an inspiration during an early morning jog. "I remember thinking about what I would tell him about how to find money," Miles says. "I ran home, went to my computer, and typed up a two-page document of a dozen ways about how to free up cash flow."
Six months later, Miles became more active in putting the new business on its feet. Today, Money Ripples teaches small business owners about ways to become financially independent. Miles has paid back about $900,000 of his debt and says that his business is profitable.
"I learned to really have patience and faith—faith to move forward, to never give up—and to have patience that things can turn around," Miles says. "I learned the importance of self-discipline and controlling your emotions. Those things have been invaluable to me. Even when times look bleak or tough, there is less fear when I encounter challenges. I'm a lot more calm and I'm able to move forward."