Learning through failure, or “flearning”, is a valuable part of any entrepreneur’s journey. But that doesn’t make it any less painful.
Updated 11 August 2017
When he finally made it home after the launch night of his very first business, Robert Gerrish jokes that he sat down and flicked through a Porsche catalogue, so impressed was he with the way the evening had unfolded.
It was the early 1990s and several months earlier Gerrish, now well known for founding Australian solopreneur hub Flying Solo, had sold his house in London and used the money to buy a derelict public toilet.
“I was fairly arrogant, convinced that I knew why contemporary art wasn’t as accessible as it could be,” he says.
“I decided it was all because the art world built this pretence around art and they put this block between the buyers and the young artists.”
He spent his money on turning the outdoor convenience into a gallery, a move that attracted enormous media attention. It was the type of marketing that money couldn’t buy and led to an incredibly successful first night, at least in terms of attendee numbers.
That night Gerrish sold a piece for £5500 (about A$11,000), leading to his moment with the Porsche catalogue. But his next sale, a very distant six weeks later, brought just £55 (A$110) into the struggling business.
For every business that shoots to the heights of success, there are hundreds that crash and burn. We often hear the success stories, but the lessons learned from failure can be more useful.
Taking a dive
“When I announced I was closing I had a number of collectors come to me and say it was a shame,” Gerrish recalls.
“They had been keeping an eye on me. That was a real lesson for me. When you first start up, a lot of people lurk and observe you as a business owner before they transact with you.
“You need to have enough in reserve financially to keep doing what you’re doing consistently and well, long enough for those people to feel confident.”
He says there is a difference between attracting a crowd and attracting a group of people that are going to spend money.
“There’s an old quote – ‘Don’t count the people you reach, reach the people that count’,” he says.
“I hadn’t thought about what I was going to sell. The gallery was exhibiting in-your-face, confronting artworks. They weren’t the kind of thing people wanted to take home with them.”
When best-selling business author Andrew Griffiths purchased his first business, his experience was even more disastrous. It was a scuba diving shop in Sydney’s Hornsby.
“It was 30 kilometres from the ocean,” he says with a smile.
“I now have a much greater sense of self-value and I have learnt to charge what I am worth.” Andrew Griffiths
“Even to the world’s dumbest person there would have been some relevance to that fact.”
He very quickly realised he didn’t have the slightest idea how to run a business. His solution was to visit other dive stores and do exactly what they were doing.
“They had plastic crabs in a fish net on the wall, so I put plastic crabs in a fish net on the wall,” Griffiths says.
“It was a disaster and just kept getting worse. I was hundreds of thousands of dollars in debt.”
A friend sent him a business adviser who recommended a long list of changes.
“He said, ‘The problem is you’re treating this business like every other dive shop. Everything is cheap. You don’t charge enough. Your dive instructors are slobs. You’ve got to turn this into a boutique.
“Double your prices, halve your stock, put your dive instructors in suits and cut off their ponytails.”
Griffiths took the advice and his fortunes reversed, at least for a while. A year later he was fleeced by a business partner he’d recently taken on, who sold everything in the shop, as well as boats and other vehicles, then disappeared – all while Griffiths was at sea on a holiday.
“I welcomed him into the business because I was tired and exhausted and the thought of having someone to share the load was really appealing,” Griffiths says.
“Deep down I don’t know if I trusted him, but I didn’t listen to that gut instinct. And although it was difficult, I have learnt you have to let personal grudges go.
“Also, I now have a much greater sense of self-value and I have learnt to charge what I am worth. If somebody is going to be the most expensive in their field, it may as well be you. Just make sure you stand out and are worth it.”
Make failure your friend
In his book The Naked CEO, Alex Malley, former chief executive of CPA Australia, describes how a mistake is really a “friend” – and one that will make you stronger and smarter.
In fact, he argues, mistakes may teach you more than successes.
“Mistakes teach the importance of accountability, and often confirm that you’re taking chances – necessarily extending the risk factor by extending yourself,” he says.
“When a decision you have made, or a course of action you have taken, turns out to be the wrong one, you haven’t made a mistake, you have made a friend.”
Never shy away from a failure and never act as if you were not to blame, Malley advises.
Accepting responsibility and acknowledging that you have learnt a lesson from the experience is important in extracting all the value you can from the situation. Acknowledging your failure, he says, will immediately make you stronger.
Stop failing and start flearning
“I call it having the courage to fail,” he says.
“More often than not, those people brave enough to take calculated risks to achieve bigger things are far more impressive and stronger as people.”
“All learning requires practice, and business skills are learnt.” Robert Gerrish
A fine example of such learning is Sarah Cobb, now the Australian franchisor of international networking and referral marketing business BforB. Her first foray into business in Australia was not a success.
After she married an Australian, Cobb brought a business Down Under from her family home in Barbados. Her parents’ trade was selling locally-designed products from the Caribbean, and Cobb was going to replicate it in the Asia-Pacific region.
But Cobb’s husband had three children, and suddenly there was not as much time in each day to throw herself into work. The Australian business culture was also completely different, with retailers wanting to deal only with travelling sales reps, rather than ordering directly from the source. After a three-year struggle, Cobb’s business closed its doors.
“To me there were two big learnings,” Cobb says.
“One was about the change of culture and the value of market research. The other was about the impact of family. The second time around we brought a business over from the UK because it had a similar business culture. And we did it in stages and allowed time, money and resources to test and customise it for the Australian market. That has worked well.”
While failures are immensely painful, they can lead to a stronger business and a better place.
“My career is peppered with things that didn’t work, but I don’t choose to think of them as failures,” Gerrish says.
“I have a real dislike for that word. I don’t think it tells the truth. When an employee leaves a job for another job, it doesn’t mean the last job was a failure. It just means they have grown and want to move on to something else. It is the same with businesses.”
All learning requires practice, and business skills are learnt. So what are you waiting for? Get out there and fail.
Lessons from the school of hard knocks
- Never go into a new business without the financial back-up to survive without income for at least six months.
- Have a good idea of how you are going to monetise your business, and a very clear picture of who that money is likely to come from. Many business owners put a lot of effort into attracting crowds, rather than selling to a specific market.
- Be different from your competition. Without a clearly communicated and easily understood point of difference – a unique selling proposition – there is no reason for customers to move their business to you. Only “borrow” ideas from competitors when they are truly brilliant. Knowing your point of difference means you can charge what you are worth rather than entering a price war.
- Running a business will always be tiring, but you must be clear-headed when making big decisions – give those decisions the bandwidth they deserve.
- Stick to your plan, rather than making panicked changes. Remember that your market is watching you. Potential customers will be scared off when they sense a lack of direction.
- Be realistic about the business environment by conducting thorough market research. Blind confidence is dangerous in business.
- Make friends with failure. Without the gift of failure you would not be able to ride a bike or swim in a pool or write a sentence.