Your first day at school. The first time you drove a car alone. Your first day at work. These events were life milestones that were preceded by some measure of fear – the dreaded “what ifs”.
What if I fail my tests? What if I don’t win any friends? What if I crash the car? What if I hit someone? What if I make a costly mistake at work? What if my supervisor and I don’t get along?
Over time, going to school, driving a car on your own, and reporting for work become routine.
Many of the “what ifs” were resolved and put away from your consciousness. If a situation came up, you addressed it. Simple as that. You move along. No big deal.
But overcoming fear as an entrepreneur… well, that’s a different story.
Why Is The Fear Of Failure Greater For Entrepreneurs?
Do you remember the day you decided to become an entrepreneur? What circumstances pushed you to decide to transition from the 9-to-5 corporate lifestyle to pursue entrepreneurship?
The reasons for starting a business are different but its origin is the same for everyone – entrepreneurship starts as an idea. As the idea is cultivated, it becomes a dream.
For many, it remains a dream. Then, there are those who believe the business idea is their opportunity to become financially independent. They are tired of other people – their bosses – reaping the rewards of their hard work.
“It’s time to take the reins of my career. It’s time to become an entrepreneur!”
Becoming an entrepreneur is a big step. Work and life as you know it will change. And those changes become the roots of your fears.
- “What if no one buys my products?”
- “What if I can’t pay back my business loan?”
- “What if I can’t pay my employees?”
- “What if businesses ignore my services?”
- “What if my e-commerce website doesn’t generate enough visits?”
- “What if my website gets hacked?”
- “What if I end up working 14 hours a day that I don’t have enough time to spend with my family?”
As an employee, you’re assured of a paycheck every 2 weeks. With a regular salary, you could settle your monthly obligations, take care of your family, pay for your day-to-day needs, and have savings in the bank.
You get benefits and bonuses from your employer. You have paid leaves that you can schedule so you can take the family on a vacation every year. You might have even had healthcare and health insurance that you can use to pay for your medical bills.
If work at the office became challenging, you had the support of your fellow employees. If the business closes down or if you get laid-off, you can always look for another job.
As an entrepreneur of a start-up venture, you’re not assured of a regular salary. You can factor a salary as part of your monthly expenses. But if business is bad, your salary is one of the first expense items to be put on hold.
Whatever money you have will be used to pay the employees, utility companies, suppliers, and creditors.
If you can’t pay your employees and suppliers, you could be sued by them.
If your website gets hacked, customers whose personal data you lost could sue you.
If you can’t pay your business loans because your products and services can’t find customers, you might end up losing your collateral which is usually the house.
If your business closes down, you shouldn’t start a new one right away. You have to recover financially and emotionally.
As an entrepreneur, failure could mean losing everything.
5 Tips On How To Overcome The Fear Of Failure As An Entrepreneur
The fear of failure can be so great that it keeps the entrepreneur awake on most nights. Worse, it paralyzes the entrepreneur from making tough decisions.
But it doesn’t have to be that way.
You can overcome your fear of failure as an entrepreneur. It starts with reframing your views about failure.
1. Change Your Views on Failure
We live in a world that pushes the “winning is everything” mindset. The truth is, there are more losers than winners. Winning and losing isn’t a zero-sum game.
For every job opening, only one out of 250 applicants is hired. A project might receive 100 bids, but chances are the company will choose one contractor. For every NBA champion that’s crowned, 81 franchises go home as losers.
Losing isn’t the end of the world. Every time you lose or fail, it creates an opportunity for a new beginning… if you change your views on failure and realize it’s a learning experience.
Failure exposes your flaws and weaknesses. Failing doesn’t just happen. There are factors behind the circumstances that led to your failure. So instead of wasting valuable time wallowing in self-pity, find out why you failed.
Howard Schultz, Walt Disney, and Bill Gates didn’t quit when their business ideas were criticized, rejected, or low-balled by investors. They continued to push past failure and pursue their dreams until Starbucks, Disneyland, and IBM became real businesses.
Failure won’t sugarcoat why you lost. It’s up to you to accept reality, learn from your mistakes, and come up with a plan to get back on your feet and win the next time around.
2. Don’t Give Up That Day Job
The number one reason why small businesses fail is the lack of adequate capital. Generally, you must have working capital good enough to support at least 1 year of operations.
If your funds are running low and the business still can’t sustain itself, you’ll be in trouble. The immediate course of action would be to apply for a small business loan.
However, if your business hasn’t shown sustainable growth, getting a loan might be a risky strategy. Besides, the bank might not approve your loan application if it reviews your finances and identifies an obvious cash flow problem.
Borrowing from friends and family is another option. But would you want to risk your relationships with friends and family by borrowing money you might not be able to repay?
You can consider going to angel investors and venture capitalists… that is if you don’t mind losing majority control of the business or have the investors’ watching your every move.
Rather than borrowing money or getting investors on board, why don’t you bootstrap your business?
Bootstrapping is a strategy whereby the entrepreneur establishes and funds the business using personal finances. You can fund the business using your savings, the proceeds from the sale of assets, or your salary.
Thus, it might not be a good idea to give up your 9-to-5 day job if your business still can’t support itself.
Your day job will provide you with a steady source of funds to pay for the expenses of your business until it becomes self-sufficient. You won’t be as stressed out knowing you have a “money well” to draw from.
Manage your salary wisely. Break down salary into:
- Recurring monthly expenses.
- Day-to-day expenses.
- Savings.
- Business shortfalls.
As much as possible, don’t touch the money that you’ve saved in the bank up to this point.
If you have an investment where you have already recovered the principal amount, you might consider liquidating it and using the proceeds to fund your business.
For example, you bought a house for US$5,000 five years ago. According to a real estate broker, he can have your house sold for US$15,000 net of taxes, documentary stamps, and broker’s fees. You can sell the property and reinvest some of the profit to your business.
Just make sure that once you get the proceeds of the sale, put back the principal amount – US$5,000, maybe a bit more, like US$7,500 – back into your savings account.
When you’re confident that your business can support itself, then, you can take the risk of resigning from your day job and becoming a full-time entrepreneur.
3. Create a Solid Business Plan
“Do you have a business plan?”
Chances are the majority of entrepreneurs that you ask this question will say “Yes”.
The truth is, that only 33% of entrepreneurs have created and used a business plan.
Having a comprehensive business plan is important for every entrepreneur because it provides the blueprint for your success.
The Business Plan summarizes the following areas of your business:
- Purpose
- Objectives
- Strengths and Weaknesses
- The Target Market
- Market and Industry Overview
- Challenges
- Financials
- Strategies
- Courses of Action
- Alternative Courses of Action
If things aren’t going as planned, refer to the Business Plan.
The financial study will include projections on income and cash flow. You’ll have an idea of when you might need an additional infusion of cash if sales targets aren’t met.
Under “Strategies”, you must define your exit strategy.
What is your cut-off point where putting in more money is no longer a viable option? How much loss can you tolerate before you decide with finality to pull the plug on your business?
The Business Plan can help you overcome the fear of failure because you’ll be more prepared to handle potential problems when they happen.
4. Think Big… But Go Small
There’s nothing wrong about wanting to become a billion-dollar company. But before you get to a billion, you have to get to a million. Before you get to a million, you have to get to half a million.
You get the picture. As the saying goes, “The higher the risk, the higher the reward.”
Break down your big goal into smaller ones that are more realistic, manageable, and achievable. The accumulation of accomplishing smaller goals will bring you closer to achieving your big goal but with lower risk.
For example, your big goal is to have 100 stores operating throughout the United States.
You might not be able to accomplish this in your first year of business. Perhaps, not even in 3 years.
If you “force the issue” and expand the business when you don’t have the capacity and the demand, you might end up availing of loans you can’t pay back.
Start with just one store. Establish targets for income and profit. If you exceed the targets and the success levels are sustainable, start planning for the second store.
Let’s assume that after 3 years, you have 15 profitable stores operating. You should have enough business data to help you decide if the risk of securing a loan is justifiable or if franchising to third parties is feasible.
Again, you can break this goal into a smaller one by expanding only on the West Coast where your brand has the largest customer base.
Even with smaller goals in sight, you’ll continue to face challenges. But the risks will be manageable and your fears won’t be insurmountable.
5. Focus on Daily Holistic Productivity
Holistic productivity is having the ability to accomplish tasks, fulfill obligations, and participate in activities other than those related to business.
For example:
- Quality time with the family.
- Time for exercise.
- Time to do complete errands such as buying groceries, paying the bills, picking up the laundry, and watering the plants.
- Time for prayer and meditation.
- Time to prepare meals.
Then, there’s “Me Time” or time to do the things you want to do such as work on your hobbies, pursue interests, or catch up on your favorite shows.
There are 3 reasons why achieving holistic productivity is important…
- You are reminded of why you became an entrepreneur, who and what you are working hard for – your family, your health, and your future.
- It will help you maintain a sound mind and a healthy heart. Spending quality time with the family will make you happy. Finding time for exercise will improve your health and protect your body from the dangers of stress.
You won’t be as stressed out.
- Your family and friends can provide you with guidance, wisdom, and comfort during times of difficulty. You don’t have to deal with failure on your own.
Remember, spending endless hours in your business won’t guarantee success. If a problem or issue persists, that means you can’t resolve it in one day. If some progress is made, even baby steps, you’ll be able to fix the situation in time.
However, time lost for family, friends, and health is time lost forever. And there will be consequences for the decisions you make. As an entrepreneur, work to live, don’t live to work.
Conclusion
The thought of failing as an entrepreneur is the stuff of nightmares. Every day, you’re grappling with the stigma, real or imagined, of friends and former co-workers perceiving you as a failure; a tragic figure like Icarus who flew too close to the sun and got burned.
But isn’t becoming an entrepreneur all about taking risks – of taking chances? That’s why entrepreneurs are commonly referred to as “risk takers”. The courage to take risks separates the doers from the dreamers.
While you’re trying to make your dreams turn into a money-making reality, the rest are left dreaming about their business ideas in the office break room.
That makes you tougher than you think!
Don’t sell yourself short when you’re faced with unfavorable situations. View the situation as your moment to shine. Resolving it might be the pivotal point where your business turns the corner.
Follow the 5 tips we’ve shared in this article and never be fearful of failure again. Instead of being afraid of failure, embrace its reality.
Don’t run away from failure.
Run toward it.
If you enjoyed this article and want similar content for your website or social media, contact us.
Our blogs and websites have won many awards from clients, business websites, and reputable digital marketing agencies.
