Bouncing BackEntrepreneurs who've been there share hard-won lessons for making a business work the second (or third... or fourth) time around.

他们成功了,一些数以百万计的洋娃娃ars insales under their belts. But they still bear the scars. When theytalk about the experience, their voices rise in anger, drop to awhisper or quiver as if it had happened yesterday, not five, 10,even 20 years ago.

What they're talking about is business failure--and it'sno wonder these entrepreneurs harbor such strong emotions."People whose [businesses] fail are made to feel likecharacters in a Hawthorne novel, branded with a scarlet`F,' " says Jeffrey Shuman, director ofEntrepreneurial Studies at Bentley College in Waltham,Massachusetts.

How, then, are some entrepreneurs able to pick up the pieces andstart all over again? And why do many so-called failures findsuccess the second time around?

The answer, say experts and entrepreneurs who've been there,lies in changing the way we look at failure. It means learning toaccept, as Shuman puts it, that "failure is inevitable"for everyone. Yes, everyone--and, yes, that means you. You see, noone stands to learn as much from failure as the entrepreneur whohasn't been there--yet.

Hitting Close To Home

Business failure takes many forms, from the company that goesspectacularly bankrupt to the failing firm that is quietly sold ata loss. But whether the business goes out with a bang or a whimper,the emotional impact is the same. "The death of a business islike the death of a [loved one]," says Tualatin, Oregon-basedconsultant Gary Goldstick, who still vividly recalls the"nightmare of despair and humiliation" he felt when hiselectronics manufacturing company went bankrupt nearly 20 yearsago.

Business owners go through the same stages as those dealing withdeath, says Princeton, New Jersey, psychologist Susan Edwards,Ph.D.--shock, denial, anger, depression and, finally,acceptance.

How to speed the process? You can't. "[After a businessfailure,] you need a period of decompression to rethink andrecharge," contends Will Sogg, a partner with Cleveland lawfirm Hahn Loeser & Parks LLP. "People are too quick torush into the next thing just to prove they can do it."

Because entrepreneurs invest so much of themselves in abusiness, says Edwards, failure batters both personal andprofessional self-esteem. What can you do to rebound? Spend this"downtime" investing in your personal life. "Spendmore time with your kids, family, going to church or whatever worksfor you," Edwards advises. Counseling, support groups andstress management techniques can rebuild self-confidence, too.

"Remember, your business has failed; you haven't,"says Penny McConnell, who successfully started over afterPenny's Pastries, her Austin, Texas, specialty bakery, wentbankrupt in 1996. "Don't get stuck in the negative energyof `You are a failure.' "

After the shock wears off, entrepreneurs typically have one ofthree reactions, says Mark Rice, assistant dean of the Lally Schoolof Management & Technology's Center for TechnologicalEntrepreneurship at Rensselaer Polytechnic Institute in Troy, NewYork. Some realize they aren't cut out for entrepreneurship andgo back to working for someone else. "At the other end of thespectrum are the entrepreneurs who say `I did my best, but itdidn't work out. I'm going to take what I've learnedand get it right next time.' "

Rice, a former business broker who has dealt with hundreds ofstruggling entrepreneurs, says the danger zone is somewhere inbetween. "There's a group that doesn't realize theirmistakes. If they start a business again, they often repeat thesame errors."

The key to future success is an honest assessment of what wentwrong and a plan to make it right. "Put yourself through ahealthy, constructive period of self-assessment--preferably withadvisors, such as a trusted accountant, investor or attorney,"says Rice. "Ask them to help you think through why thishappened and what you can do differently [next time]."

Outside consultants are crucial, Goldstick agrees, becauseentrepreneurs tend to be better at action than reflection."Self-analysis isn't always in their bag oftricks."

When Goldstick analyzed his strengths and weaknesses, herealized he didn't want to manage a lot of employees or seekcapital from outside sources. The second time around, he launchedG.H. Goldstick & Co., a one-man management turnaroundconsulting business requiring minimal capital outlay.

Equally important is accepting responsibility. "Don'tblame others for your errors. Don't blame yourselfunnecessarily, either, but realize what was in your control andwhat wasn't," says 40-year-old Eric Ruff, who was forcedout of his first software company, Gazelle Systems, in Orem, Utah,as a result of power struggles. "We all have a responsibilityto learn from our mistakes and improve."

Back To The Well

One asset entrepreneurs who bounce back from failure share issupport from friends, family and colleagues. "Ninety percentof the people I knew were incredibly supportive," saysMcConnell, who relaunched Penny's Pastries in late 1996, justmonths after going through Chapter 7 liquidation. "That helpedme decide to go back into business."

Still, it wasn't all pats on the back: "I did get someanonymous letters saying `How could you take the easy way out anddeclare bankruptcy?' " McConnell says, still smartingat the memory. "There isn't anything easy aboutbankruptcy."

如何交易?不要浪费时间在fair-wea哭therfriends. Instead, take strength from those who support you--andtake a hint from those who don't. Ruff was newly remarried witha baby when he launched his second software business, PowerQuestCorp. He recalls, "My in-laws tried to be supportive, but atone point, my father-in-law said, `Have you thought about getting areal job?' " Rather than dampening his spirit, saysthe Lehi, Utah, entrepreneur, the comment spurred him to act."That lit the fire in me," he says. "I needed tohave people challenge my sanity. If people only support you [andnever question you], well, maybe they're wrong."

Even when family supports your decision to start a new business,they may not be willing--or able--to put their money where theirmouths are. "Most entrepreneurs get their start-up fundingfrom family and friends," says Sogg. "After [the firstfailure], you may have exhausted that [financial]resource."

With mom and dad tapped out, can you go back to the bank forfunding? Don't bet on it. "Even if you've learned fromthe experience, conventional sources of financial support arediminished by virtue of a failure," says Sogg, speaking from38 years of experience working with and teaching entrepreneurs.

A better bet? Private investors--like the ones Penny McConnellturned to--or venture capitalists. "Sophisticated investorslike to see someone who has failed a lot--on someone else'sdollar--and has learned from the process," says Rice. This isespecially true in high-growth industries, such as restaurants,franchises or high-tech, which investors know are alsohigh-risk.

That's not to say finding capital will be easy or willhappen right away. "We approached more than 100 financingsources," recalls Ruff. "It was tough to be snubbed byvirtually every person. Some venture capitalists actually made funof me to my face." Still, Ruff persevered and finally foundfinancing from the Commission for Economic Development of Orem."All we had was debt and expenses, and they still gave us an$80,000 loan," he marvels. "They said, `We knowyou're honest and you can make it work.' "

Experts agree an honest, forthright, trustworthy business owneris likely to get a second chance. Not so for someone who left atrail of unpaid suppliers and angry customers. Says Shuman,"What matters most [about failure] is personal integrity--howyou handle it."

New Attitudes

Back on their feet again, what do entrepreneurs do differentlythe second time around? For Shuman, who has been involved in fourstart-ups, the key is a change in attitude. "The fundamentalmistake is believing you can get it right the first time," hecontends. "If you think that way, you bet all the chips. Then,when you fail, you have no chips left."

Instead, Shuman says, successful entrepreneurs realize they arenot starting a business; they are starting a process--a conceptexplained in his bookThe Rhythm of Business(Butterworth-Heinemann). "When you start abusiness,that can fail," he explains. "When you start aprocess,you accept failure as a healthy, normal part ofthat process."

There are four steps in the process: planning, preparing,interacting with customers, and analyzing and refining yourbusiness based on those interactions. "Figure out what workedand what failed, and adjust your business accordingly," saysShuman. This could mean making minor changes--or shutting down.Either way, Shuman stresses, it's just part of the process.After step four, you start all over again in a cycle that continuesthroughout the life of the business.

Shuman cites Bill Gates as a prime example: "Windows 1.0was a failure," he says. "Gates put more money into it,and a few years later introduced Windows 2.0. That didn't work,either. But all along, he was interacting with customers, gatheringinformation. When he introduced Windows 3.0 in 1990, it was a hugesuccess.

"The key is that Gates didn't stop there. He didexactly the same things he'd done after introducing 1.0 and2.0--looked to his customers, made some adjustments--and that ledto Windows 95. You need to repeat the same process whether [yourproduct] is a failure or a success."

Jeffrey Henning, co-founder of Perseus Development Corp. inBraintree, Massachusetts, learned that lesson after attemptingthree software start-ups that never quite got off the ground. Salesfor the 4-year-old Perseus quadrupled this year, thanks to its newsurvey software, Perseus Survey Solutions for the Web. "Thisis the first time we were able to detach from what we wanted and bedriven by market need," says Henning, who credits marketresearch with helping Perseus succeed where his previous attemptsfailed.

In addition to following the four-step process previouslymentioned, Goldstick stresses the importance of implementing anearly warning system to alert entrepreneurs to problems. His bookBusiness Rx: How to Get in the Black and Stay There(JohnWiley & Sons) lists a series of questions he calls the BusinessHealth Index. "I have my clients and their key [employees] sitdown and answer these questions on a regular basis," Goldstickexplains. "Then they meet and discuss their answers. Thisforces [entrepreneurs] to come to grips with situations they mayhave been pushing under the rug."

Penny McConnell's new early warning system is her CPA."We look at numbers, look for trends and do a lot oftweaking," says the entrepreneur, who also relies on a groupof associates as a sounding board: "If I have a new idea orsomething isn't going the way I want it to, I see what theythink."

And don't forget the basics--like a business plan. "Youcan't live one day at a time. You've got to have a visionthat goes beyond this week's payroll," Sogg says."You've got to look ahead, anticipate what mighthappen--good or bad--and be prepared for it."

"Failure prevention" is Ruff's term for it."Most people push for success as hard as they can. But moresuccessful people constantly look for ways to preventfailure," he says. "Ask `What can go wrong? How can Iprevent it? What did go wrong? How can I fix it?' When youfocus on preventing failure, the end result is oftensuccess."

For Ruff, that meant correcting every error he made at Gazelle."I was afraid to hire people who were better than me, I keptmost of the stock in the family, and I spent 90 percent of my timein front of the computer," he says, ticking off his mistakes."At PowerQuest, I did just the opposite. I hire people who arebetter than me, every full-time employee has stock or stockoptions, and I spend 90 percent of my time with people. There aredays I don't even turn my computer on."

结果呢?PowerQuest销售突飞猛涨:1997 salesare estimated at more than $25 million. Ruff launched the companybased on a hard-drive utility, Partition Magic, that executives atGazelle insisted would never fly. "In two or threeweeks," boasts Ruff, "PowerQuest sells as much as Gazelledid in its bestyear." Revenge is sweet.

Lessons Learned

Along with the importance of business plans, financial controlsand a good CPA, failure teaches deeper lessons. For McConnell, itwas patience.

Penny's Pastries had been in business close to two yearswhen McConnell expanded from her core business, handmade specialtycookies, into a line of prepackaged cookies. Almost immediately,she landed an account with Southwest Airlines. It proved too much,too soon. Struggling to supply the airline with some 500,000cookies per month, the business began hemorrhaging.

"[Today,] we still want to do big things, but we make surewe get every piece in place first," says McConnell, whorefocused on the core business and now supplies Starbucks--but just27 locations.

You have to realize you don't know everything. "AtGazelle, I was blinded by my ego," says Ruff. "I couldnever admit I was wrong."

And, sometimes, it's realizing you know more than youthought. McConnell recalls how, during her business's darkestdays, she relied on the advice of a private investor. "Ithought, `He's older; he has more experience--surely he knowsbetter.' Looking back, I think if I'd gone with my gut, Icould have saved the business.

"But I didn't know that then. Sometimes you're notsure what you know until you're tested. I think I'mstronger now than before [the failure]. I have moreself-worth."

It seems the rewards of overcoming failure are more than justfinancial. "You have a duty to the entrepreneurial world toimprove yourself and to show others by example how they can dobetter, too," says Ruff. "A true entrepreneur goes fromone level to the next. If you're only dwelling on the samelevel, or descending . . . well, then, get areal job!"

Contact Sources

Susan Edwards, Ph.D., 515 Executive Dr., Princeton, NJ08540, (609) 924-4330

G.H. Goldstick & Co., 4755 S.W. Natchez St.,Tualatin, OR 97062-8763, (503) 691-8900

Hahn Loeser & Parks LLP, (216) 621-0150, ext. 2250,wssogg@hahnlaw.com

Penny's Pastries, 5501 N. Lamar, Ste. A-135, Austin,TX 78751, (512) 302-3663

Perseus Development Corp., (617) 848-8100,http://www.perseusdevelopment.com

PowerQuest Corp., (800) 379-2566,http://www.powerquest.com