Use setbacks as learning tools to achieve success in 2020.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
As you reflect upon this past year, every entrepreneur can likely point to a time when challenges got in the way of potential success. Whether a business setback was big or small, there is usually an opportunity to learn from missteps, grow from experiences, and turn defeats into victories. Here are a few common challenges business owners face and ways to turn those lemons into lemonade.
1. Your “Big idea” fell flat
It’s painful to confront situations in which reality falls short of expectations, be it personally or professionally. Data from one study from MIT and Northwestern showed that only 40% of nearly 9,000 new products are still for sale three years after launch. If you launched a new product or service in 2019 that didn’t take off the way you had hoped for, you’ve experienced a common challenge among business owners.
As ego-bruising as it is to admit that your big idea didn’t connect with customers, it is the first step toward nailing the next launch. In order to make a bigger impact next time you introduce a new product to your market, do the deep work of ensuring that your big idea is truly solving a pain point or delighting your customers. This work will unveil whether you should pivot your approach or kill the idea altogether.
Related: 8 Success Lessons From the Richest Person on the Planet
Your “post-mortem” should begin with understanding your customer and their needs. This may mean looking beyond your core business, recognizing the full range of choices your customers have and how your product is differentiated. Your product or service may have also failed, not because of the concept, but the execution. Consider inspecting your distribution model, marketing strategy and/or timing for launch. Although many insights can be derived from data, the best information will come directly from your customers so getting out in the field and talking to them or observing them will uncover a lot of actionable information. Examining which parts of your launch sang while figuring out which others fell flat will be a good clue into identifying the changes you need to make and your opportunities going forward.
2. You exceeded your budget
We all know the old adage that you have to spend money to make money. And although that’s often true, sometimes things don’t go exactly to plan and you end up simply spending — and far beyond what you’d anticipated and budgeted for. Some expenses are unavoidable, like emergency repairs, while others can be easier to anticipate, such as new employee costs. And, sometimes, you simply make a miscalculation in your projections that ends up costing you.
No matter the scenario that pushed your operating expenses over the edge, this year, the opportunity is in getting a critical eye on your finances. This may mean handing over the reigns of your books by working with a bookkeeper whose primary goal will be keeping you on task and keeping you aware of what you’re spending. Or, if you already retain a bookkeeper, you might want to hire an accountant with a sense of your industry to dive deeper into your costs. Accountants have greater knowledge of complex factors affecting your budgeting and costs and also have a toolkit of resources and advice such as having additional financing like a line of credit available to tap into as you encounter costs in the coming year.
Related: 7 Mindsets That Guarantee Enduring Success
Think creatively, too. Sometimes it’s helpful to engage with business owners in your sector to take the pulse of the industry in general. Higher than expected costs might not be limited to your business, and your peers might be feeling the pinch, too. Forging relationships with competitors — paradoxical as it may sound — can also yield insights and prove beneficial for both parties.
3. You can’t find the right talent
No matter how much time you spend on a hire, and how perfect you think they’ll be for a certain role, the reality is that you’ll never actually know whether someone is a fit until you get them in a chair, in the field, or talking to customers. And that’s an expensive process: the Society for Human Resource Management estimated the cost of hiring a new employee of about $4,200, with about six weeks of time consumed by the search. The figure is a tough pill to swallow when you invest both time and money into a new hire, only for them to not work out for whatever reason.
Related: Richard Branson’s 8 Keys to Happiness and Success
But, there’s an opportunity to make sure the next hire you bring on will be right for your business. First, be sure you’re using your network — good people know good people. Ensure your employees, business partners, friends and family know you are hiring and ask for referrals. Second, remember that there’s no such thing as a perfect candidate. Knowing that alone will make hiring less challenging. Be flexible, determine what parts of your candidate are more important than others, and be open-minded to unique skills and attributes that may not have come to mind during this exercise. Third, know when to cut your losses. If you don’t feel like the person you’ve hired is the right fit – they likely feel the same way. Have an open and honest conversation with them sooner rather than later, be specific about ways they can improve and a timeline for when you expect improvement. If you don’t see any changes to their performance, then it is better to not waste either of your time.
As you dive into the New Year, understanding the reasons why you encountered past challenges can propel you forward, and set you up to capitalize on opportunities and promote growth.