Monday, December 19, 2022

Failing Upward

 If you don't like failing on a continuous basis, small business is probably not right for you. They say an entrepreneur is someone who fails early and often, knowing when to cut their losses and move on. That moving on for an entrepreneur might be realizing they didn't build for scale, so they sell what they've built. For a small business owner, there is no early and often failure. You fail and you might lose your house. Entrepreneurs are all about gambling with Other Peoples Property. Us small business owners fail differently.

Small business failure is calculated. Failure is constant trial and error. The important part of our failure is risk management. For example, there is an amount of product I buy for my store. If I bring in too much, it doesn't matter how many sales I made, I'll lose money. If I bring in too little, I leave money on the table, and I fail to offset my other failures, of which there are many. I have failure all around me, so I need winners to shore up my shortcomings. 

Over time, I fail less. In the aggregate, I'm winning! I never stop failing, I just do a better job with my failures. I assume failure. I create systems to manage failure. I embrace failure as a learning experience and use it as an opportunity for others.

I love this. That's right. My brain is tickled by this entire Rube Goldberg small business machine. I enjoy the learning process. I get caught up in other peoples excitement for new product and opportunities. I  embrace the heartbreak that comes with the inevitable failure of absolutely every product or service. Entropy is not just my friend, she's my lover. If this sounds dark, well yeah, it is! It will crush your idealism and it's often important to keep me away from the young and enthusiastic. I will crush your spirit, purely by accident, whether you're a game designer or new employee. I admit I love the game, not the player. Best to keep that under my hat. Send Gary back home to work.

Back to failure: It is assumed I will be failing daily. However, my failures must be offset by my wins. December is a month that I've often expressed as when sins are forgiven. Strong sales, clearing out dead wood, allows us to overlook our mis-picks and poor forecasting. All this failure leads to profit and I can bask in the glow of a flush bank account. I'll pay some bills, buy some toys, save up for a project, squirrel away money for taxes, and expect a lean first quarter where I'll question my life for the thousandth time. Fail early and often, but make sure your successes outweigh your failures. Retailers are like squirrels, working like mad, collecting nuts for the winter, knowing when to eat them and when to hide them. If I could give one piece of advanced retail advice: Know what to do with your nuts.  

A finance friend recently said that investments are great, but you, the individual, need to build your own returns through effort. You collect the nuts, the finance guy can only tell you which tree to put them in. Everyone needs to be entrepreneurial. I'm not so sure about that. I'll be the first one to read your business plan, but I'll also admit running a business is not right for everyone. It's not right for the vast majority of people. The percentage of adults who own their own businesses is 9%. Of those 9%, willing to risk it all, only 35% manage to stick around by the 10 year mark. That's about 3% of the population that know how to fail upwards. Are you inspired yet?