Most entrepreneurs who start new businesses understand that failure is a significant possibility, but they optimistically hope that their startup will defy the odds and become massively successful. No matter how hopeful you are—or how skilled you are as an entrepreneur—a failed startup is never more than a few bad decisions away. We will talk bout how to recover from failed startup.

A startup failing isn’t necessarily a reflection of your abilities, but it can hurt both your ego and your wallet. How do you recover from a failed startup and maximize your chances of success the second time around?

How To Recover From Failed Startup: Make the Final Decision

Before you get too far into the process, you’ll need to finalize your decision and take the actions necessary to dissolve your business and prepare for the consequences of losing it. Most businesses aren’t permanently closed because of financial difficulties or some threatening external event; rather, entrepreneurs make the decision to close a business once they realize there’s no way out.

If your business is failing, that doesn’t necessarily mean it will continue failing in the future. A struggling business can recover by means of revitalized marketing strategies, cost-cutting measures, new product development, rebranding, and other strategies. But if you’ve already tried these and you’re out of options, or if you’re ready to throw in the towel, it may be time to make the final call.

This is a major decision that you can’t easily walk back, so make sure you’re in a clear-headed, unemotional state of mind when you make it—and make sure you have all the information necessary to ensure you make a logical call.

Audit Your Finances To Recover From Failed Startup

As you prepare to close your business, closely audit your finances. Take inventory of your standing debts as well as outstanding accounts and speculate which of your assets can be easily liquidated. If your business is in a difficult financial position, closing the business can be complicated; in some situations, the right move may be to declare bankruptcy.

According to attorney Rowdy G. Williams, “People sometimes see bankruptcy as a singular monolith, but the reality is that there are many types of bankruptcy. The type of bankruptcy you choose will impact how much debt will be discharged, and how long the process will take.”

Working with a lawyer, you can determine whether bankruptcy is the right move for closing your business, and if so, which type of bankruptcy would be most appropriate. Otherwise, you’ll need to keep a close eye on your assets, liabilities, and transactions as you begin to shut the startup down.

Facilitate an Organized, Orderly Shutdown

An organized, orderly shutdown is going to be quicker, less stressful, more legally sound, and easier on the people around you. Accordingly, you owe it to yourself and to everyone else in your business to remain as structured and professional as possible during the shutdown.

Work with Decision Makers

Consult with major decision-makers in your business if you haven’t already. Depending on the structure and nature of your business, you may need them on board with your decision before you begin to follow through.

Collect Outstanding Accounts

At some point, you’ll need to collect on outstanding accounts. This can help you reconcile your final finances and receive some money to settle any outstanding debts.

Inform Your Staff

Think carefully about how you want to inform your staff. In most cases, it pays to let them know as early as possible and as sympathetically as possible. Give people time, direction, and resources so they can properly process what’s happening and set a course for their futures. Make sure you explain your reasoning for shutting the business down as well.

Inform Your Customers

You’ll also need to inform your customers. Give them full instructions on how they should handle this, and consider recommending alternative product and service providers who can fill their needs.

File the Necessary Documents

Depending on your type of business and where it’s located, you’ll likely need to file some paperwork to formally dissolve or close your business.

Plan for Taxes

Even if your business is closed, you’ll likely still have some tax obligations. Consult with a tax advisor to ensure you’re planning for those taxes properly.

Cancel Your Licenses and Permits

If you have any licenses or permits for your business, now is the time to cancel them.

Distribute Assets and Close Accounts

Finally, you’ll be ready to make a final distribution of assets and close any of your active accounts.

Initiate a Postmortem

As you begin delving into the final closure of your startup, or after you’re all done, consider initiating a postmortem analysis. Essentially, your goal is to figure out what went wrong so that you can prevent something similar in your next venture.

What was the root cause of your business’s failure? And what were the intermediate causes? Don’t make any snap judgments. Dig deep into the details to see if there’s anything you might have missed.

These are some of the best places to find clues:

Financial Documents

A company’s finances can tell you nearly everything about how it operates. You can quickly identify any financial strategies that disrupted your business and pinpoint moments in time when momentum began to shift.

Interviews and Discussions

It’s also a good idea to conduct interviews and hold discussions with other people who were active in your business. Leaders and decision-makers can give you a high-level perspective of what they think went wrong. Lower-level employees may have critical ground-level insights that leaders might lack.

Major Decisions and Resulting Outcomes

Focus on major decisions that you made throughout the course of your business and whether you could have made an alternative decision in each scenario that would have turned out differently. Hindsight is 20/20, of course, but this exercise is valuable in helping you make better decisions in the future.

External Threats

Review any external threats that played a role in the demise of your business as well. New competitors, economic turmoil, and changes in market dynamics can all play a role in compromising the integrity of your startup.

Take Some Time (If You Can)

Losing a startup you loved and worked so hard on can be incredibly difficult. Just as you wouldn’t want to return to work after losing a loved one, you shouldn’t immediately dive into a new venture the day your first business closes. Even if you feel okay with the situation, it’s wise to take a few weeks, or even a few months to process what happened, relax, and reset your frame of mind so you can start your next venture on an even footing.

Take Accountability (But Go Easy on Yourself)

You’ll greatly increase your chances of success if you can take full accountability for all your decisions and actions that may have contributed to the failure of your business. Yes, there were variables and factors outside of your control, but focusing on them isn’t going to help you succeed. You can only control your own actions and behaviors, so this is where the locus of change needs to be.

At the same time, don’t beat yourself up. Even the best entrepreneurs in the world experience failure and make egregious mistakes. What separates them from other entrepreneurs is that they learn from them and move on.

Consider Your Future

You don’t have to start a new business. You could also transform your old business idea into something new, start a new career, or take your experience and find a position that complements your new skill set. Think critically about all your options before you decide to move forward.

Prepare yourself to Recover From Failed Startup

If you do plan on starting a new business, take some time to prepare.

Classes

Many classes can help you cultivate skills or new knowledge to become a better entrepreneur.

Recover From Failed Startup Research

You can also start researching new possibilities, and potentially drafting business plans for your new ideas.

Connections

Don’t forget to network! Ongoing networking habits can help you find new mentors, partners, investors, employees, and even customers.

Learning and Moving Forward

It’s tempting to think of the failure of your startup as the end of a journey. But it’s also the beginning of a new one. If you can fully and properly recover from a failed startup, you can use your new knowledge and experience to start something even better.

Embracing the Lessons Learned: How to Recover From Failed Startup

Reflecting on the experience of running your startup, there are valuable lessons to be learned that can shape your future endeavors. Understanding what went wrong, and what went right, can provide crucial insights that help you navigate future challenges more effectively.

Analyzing Your Business Model

One of the primary areas to scrutinize is your business model. Was your revenue model sustainable? Did your pricing strategy resonate with your target market? Re-evaluating these components can help you develop a more robust business plan for future ventures.

Customer Feedback

Customer feedback can also be a goldmine of information. Engage with your past customers and ask for their honest opinions about your products or services. What did they like? What did they dislike? This feedback can guide you in refining your offerings and better meeting customer needs in the future.

Building a Resilient Mindset

The psychological aspect of recovering from a failed startup cannot be underestimated. Building a resilient mindset is crucial. Embrace the failure as a learning experience rather than a defeat. This mental shift can empower you to take on new challenges with greater confidence and determination.

Recover From Failed Startup: Seeking Support

Don’t hesitate to seek support from mentors, peers, and professional networks. Discussing your experiences and getting advice from seasoned entrepreneurs can provide new perspectives and boost your morale.

Exploring New Opportunities

With the lessons learned and a refreshed mindset, it’s time to explore new opportunities. The business landscape is ever-changing, and new trends emerge constantly. Stay informed about industry developments and be open to pivoting your business ideas based on market demands.

Innovation and Adaptability

Innovation and adaptability are key to succeeding in the modern business world. Consider how you can integrate new technologies or adapt to changing consumer behaviors. Being flexible and innovative can give you a competitive edge in your next venture.

Setting Realistic Goals

When embarking on a new venture, set realistic and achievable goals. Break down your long-term vision into smaller, actionable steps. This approach not only makes the process more manageable but also allows you to celebrate small wins along the way, keeping you motivated and focused.

Developing a Strong Team and How To Recover From Failed Startup

Building a strong, dedicated team is essential for the success of any startup. Learn from your previous experience and focus on hiring individuals who complement your skills and share your vision. A cohesive team can drive your business forward and help navigate the inevitable challenges.

Effective Marketing Strategies

In today’s digital age, effective marketing is crucial for business success. Invest time in understanding the latest marketing trends and tools. Utilize social media, content marketing, and search engine optimization to reach a wider audience and build a strong online presence.

Financial Management: Recover From Failed Startup

Improving your financial management skills can prevent many of the pitfalls that lead to startup failure. Consider working with a financial advisor or taking courses in financial planning. Ensuring a healthy cash flow and making informed financial decisions can significantly enhance your business’s stability.

Continuous Learning and Improvement

Finally, commit to continuous learning and improvement. The business world is dynamic, and staying ahead requires a dedication to ongoing education. Attend workshops, read industry publications, and participate in networking events to stay informed and inspired.

Conclusion:

Recovering from a failed startup is a challenging but rewarding process. By making thoughtful decisions, learning from your experiences, and preparing diligently for your next venture, you can turn failure into a stepping stone toward greater success. Remember, many successful entrepreneurs have faced setbacks and failures before achieving their goals. With resilience, determination, and the right strategies, you too can bounce back stronger and more prepared for the journey ahead.

As the industry awaits the Grenfell Inquiry phase-two report. Dr Bernard Rimmer asks whether the builder-developer model needs a complete overhaul

It looks as though the final report of the Grenfell Inquiry could be presented to the government this summer. Perhaps now is the time to reflect on how our industry produced thousands of flats with flammable cladding. This disaster has been hugely damaging to the reputation of the construction industry. And I am not sure that the lawyer-led inquiry will get to the root of any mistakes caused by human behaviour rather than by contracts.

Builder-developer Model Need To Change?

Governments over the decades have never seemed to understand the construction industry. And why it apparently performs so badly, with overspends, overruns and dubious quality. In the 73 years from 1945 to 2018 they initiated 81 investigations into the industry. Appointing task forces chaired by luminaries from outside the sector – indicating that the industry was incapable of reforming itself.

Egan understood that many of the industry’s problems

The last major taskforce to investigate the industry was chaired by industrialist Sir John Egan in 1998. Resulting in his report Rethinking Construction. Egan understood that many of the industry’s problems resulted from the lack of teamwork and collaboration when using competitive tendering of main contracts. But shis aspiration that leading public-sector bodies should become best-practice clients was a tall order when ministers are always declaring that they will insist on competition to get the best value for taxpayers.

“Separating design from construction came at a great cost” 

– Dr Bernard Rimmer

Also, Egan’s vision of a wholesale revolution in the industry. Was unrealistic given that it is highly dependent on its clients for its performance.

He did leave us with some important pointers on striving to create customer value and eliminating waste. But did not say much about how best to address these in the context of bespoke teams. Bespoke products, and clients of varying capabilities.

Ten years after Egan produced his report. He gave the industry four out of 10 for the progress it was making “delivering value and challenging the waste and poor quality arising from existing structures and working practices”.

Across the board the quality of the built environment still varies enormously. And much of this variation results from the way clients assemble their teams. Selecting from a diverse industry in which design resources are now largely separate from construction resources.

Architects and engineers often used to be directly employed by builders and public bodies in the 60s and 70s. But decided to form their own businesses with the protection offered by professional indemnity insurance. This change was hugely beneficial to the creative process, spawning some world-class designers in the process.

But the split introduced tricky liability issues, multiple types of contracts, tendering costs, disputes and litigation.

It also resulted in construction-only companies fighting to protect their small margins. Instead of striving to improve the value their expertise could bring to their clients. And it became rare for builders to even meet their clients.

It ultimately led in 2001 to the sale for £1 of John Laing, a company. Which, in the 1970s, had all the design and construction resources in-house to carry out projects. Including research and development, building product manufacture and trades and plant. Allowing it to complete iconic projects such as the Barbican, the Bull Ring and the British Library.

The challenges of a fragmented industry: Builder-developer Model

Separating design from construction therefore came at a great cost. Putting them together again in the best ways possible is the challenge for all clients, both public and private.

Clients have in effect become the most important players in the process. No longer able to call on the likes of John Laing to handle all their needs.

Those that follow best practice today use more negotiated. Collaborative forms of procurement in which they have direct relationships with all the players including major specialist contractors. The control of the design and construction process by in-house experts is the key to their success. And world-class developments such as King’s Cross are the result.

However, at the other end of the client spectrum, this control can be abused in the pursuit of profit. Egan might not be pleased with the way things have turned out but should take solace from the fact that innovation. Driving out waste and continuous improvement are taking place in the companies that design. Manufacture and install large discrete parts of buildings, such as whole facades, structures, and mechanical and electrical services.

Furthermore, he may find it gratifying that there have been significant advances in construction management. IT techniques for coordinating the interfaces between these main specialist subcontractors.

Multitude of different clients battling to put together

But problems still remain. With the now-fragmented industry, and the multitude of different clients battling to put together teams to satisfy their needs. It was to be expected that suboptimal results would be common. But not that buildings would be created that were immediately dangerous for occupation.

Investigations that followed the shocking Grenfell Tower tragedy discovered that flammable cladding was being used on hundreds of blocks of flats around the country.

The cladding that caught fire was a rainscreen cladding (RSC) system. Open-jointed RSC systems were developed in the 1960s, but they have also been adapted by developers of new buildings.

These systems are no longer available from companies that design, supply and install them (taking full responsibility). RSC is now designed by architects. They can obtain technical guidance from the industry-funded Centre for Cladding and Window Technology (CWT) in Bath. RSC today is supplied by subcontractors that procure all the specified parts and install them. But they do not have design liability.

When aluminium composite material cladding had to be replaced in other high-rise blocks around the UK. Critical components such as firebreaks were found to be missing in many cases.

The net result was an open-jointed cladding system with a cavity lined on both sides with foamed plastic and absent critical parts, for which no single party was responsible.

Egan’s best-practice aspirations were nowhere to be seen. Except that best value was produced for the builder-developers and negative value for the ultimate customers, with many flats still unsaleable.

The division of responsibility for the performance of the cladding was a significant factor in all of this.

The builder-developer model

To understand how some builder-developers, who are ‘self-build-for-sale’ clients. With full control of building design and procurement processes. (they are de facto chief designers), came to build dangerous buildings, we must look at their business practices.

Builder-developers of flats are mainly former builders. (some retaining the great names of the past) who started building houses for sale and then branched out into building flats for sale.

When building houses for sale, they retained their building skills. Most of which were (and still are) in traditional trades like brickwork and timber – and the heads of companies remained builders that were proud of their work. But when they started building flats, a completely different skillset was required to handle high-tech design and construction.

And, judging by how difficult it is to find executive directors from the building side on the builder-developers’ boards. It seems that the land purchasing and development executives rose to the top of these companies and the building executives took a step back in seniority.

Builder-developers still call themselves housebuilders. But their boards are comprised mainly of chartered general practice surveyors, accountants, bankers and insurers.

Contrast this with the top commercial developers that have executive directors who are chartered engineers controlling the design and construction process. It speaks volumes regarding the business culture of the builder-developers. That they did not hesitate to blame Building Regulations for the faulty design of its products. Heaping financial stress on thousands of its own customers who were mostly people of modest means with little or no savings.

It would be nice to think that flat developers will change their business practices and focus on their customers’ needs for long-lasting trouble-free facades. But it would appear that it is necessary for the government to regulate this development activity.

Building Regulations and planning requirements

Builder-developer Model: First, they need to be forced, by Building Regulations and planning requirements. To design facades for longevity and low maintenance and to provide full-time supervision of any labour-intensive facade installations.

Second, they need to be made to take full responsibility for the design and construction of their buildings through a government-approved standard contract for sale of flats. The government also needs to redraft Building Regulations in such a way that developers will not be able to escape design liability problems for buildings for which they receive regulation approval.

Egan’s Rethinking Construction report unfortunately did not prevent certain working practices of the industry creating dangerous buildings. We should not expect the Grenfell Inquiry recommendations to make much of a contribution to dealing with the serious problem of how builder-developers handle design.

As clients of the industry, as well as claiming to be part of it, and with some of them still using the names of great builders from the past. Builder-developers have brought shame to the sector and need regulating in both design and liability if they are to continue operating.

Dr Bernard Rimmer has a PhD in civil engineering from the University of Leeds. He previously held managing director roles at Clarke Construction and John Laing Concrete, and was construction director at Slough Estates

CNBC’s Jim Cramer on Monday reminded investors that much of the stock market currently depends on the Federal Reserve’s interest rate decisions, which are hard to predict as inflation persists. He said he is hopeful new artificial intelligence technology will help cut costs, but stressed that it will not happen any time soon.

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“We keep thinking that accelerated computing and generative AI will solve so many of our problems, and eventually they will, but the emphasis is on ‘eventually,'” he said. “In the near term, it won’t have any impact on the stuff we’re worried about that’s front and center, not in a time frame that matters to the Fed.”

To Cramer, AI will be a game changer. It has the potential to improve productivity and make items such as groceries and medicine cheaper, helping the consumer’s balance sheet. But the technology is not at a point where it can immediately fix high costs in sectors such as insurance, homes and apparel, he said.

This week brings new inflation data: the producer price index on Tuesday and the consumer price index on Wednesday. But because it is difficult to get these metrics under control and they have been running hotter than the Fed wants to see, Cramer suggested investors stick with stocks that are not as influenced by interest rates.

Everything is on the verge said, Jim Cramer

“Right now, at this moment, everything is on the verge,” he said. “But what’s before the verge? Well, the answer is all sorts of inflationary numbers that may drive up interest rates, making us feel like it’s too dicey a moment to invest in stocks.”

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