In early 2008 I was driving around London in a Ferrari enjoying the rewards of my recruitment business. One year later my business had failed, I was living back with my parents and bankrupt in all but name.
Losing your living, be it through government intervention or economic decline is a life changing experience. I would do nearly anything to avoid a repeat of that time in my life.
Modern therapy may describe what I have felt during the coronavirus as a resurfacing of my old 2008 feelings. I’ve undoubtedly perceived the coronavirus differently to friends who have not suffered a business failure.
I have thought many times about the person or team who for years saved and borrowed until they were able to open their first restaurant and now find themselves penniless. Losing a job is tough, losing all your assets is tougher. Losing everything and then needing to pay back the bank is almost unbearable.
After the 2008 financial crisis I founded a software business with my brother and I now find myself insulated from most of the current economic hardship. However, I am still angry when I see people flouting social distancing rules. I can only imagine what the broke restaurateur feels.
I’d like to think many broken businesses will rise from the ashes but the reality is many won’t. Whether their founders will bounce back is a more important consideration.
I am sometimes asked by people who have recently started a business and are finding it tougher than expected (the 99%), whether they should quit and go back to their former (usually corporate) life. My answer is always the same: not if you want the experience to count for something. I would give the same advice to anyone whose business has failed owing to coronavirus.
Business failure is only a valuable experience if it is transferred into a similar setting. For example, starting another business. The broke restaurateur who returns to life as a mid-tier marketing executive in a global drinks business will probably never experience that same distressed business situation ever again and the lesson of failure will have little value.
After my recruitment business failed my friends and family all told me I would be a better businessperson because of the experience. I told myself this too, it’s a soothing story to counter the pain of failure. However, deep down I knew my business failure would have little value were I to return to my previous corporate career as an accountant.
I chose to stay in the new business world and my lesson in failure directly informed my next venture, my software business. The fundamental weaknesses I built into my recruitment business were not repeated. The issues I had with my partner in the recruitment business were eliminated because my software business partner was someone I knew very well. my brother. The over reliance on one recruitment customer for 80% of revenue was avoided by having many more diverse software customers. The recruitment business involved lots of working capital and lots of expensive people, the software business has zero working capital and very few people.
If you’re one of the many that has suffered business failure owing to the coronavirus, I genuinely feel for you. And I would urge you not to surrender your dreams just yet and use this failure to fuel the next venture.
Written by Andrew Tollinton, Chair IoD YDF and Founder SIRV