When Susie Taylor walked onto the set of ABC’s Shark Tank, she showed the investors her stain-resistant baby bibs and asked them for $40,000 to grow her Miami business. But something happened Taylor didn’t expect. The “sharks” reduced her to tears by calling her business a hobby, her margins terrible, her management skills lacking, and then delivering their famous line to indicate they weren’t investing: “I’m out!”
Taylor walked off the set in tears, having failed to secure an investment before seven million viewers on national television. Then she faced the challenge of bouncing back.
If your business or strategy failed, if you made an expensive mistake, or if you experienced a business or personal setback in 2014, this is the time for recovery. Today, failure is a hot topic, and the topic of bouncing back is even hotter. In Silicon Valley, for instance, failure has emerged as a badge of honor among start-ups who share their lessons publicly. FailCon, a one-day conference in San Francisco celebrating failure has been so successful that it has spread to other countries.
While no one wants to fail, wildly successful entrepreneurs such as Spanx founder Sara Blakely say that true failure is not taking risks or trying. Blakely publicly credits her embrace of failure for what helped make her the youngest self-made female billionaire in America.
“Most successful people have ‘failed’ multiple times,” says David Harkleroad of Chief Outsiders in Miami, a consultant to CEOs of small and mid-size companies. “What makes them successful is they seek to understand the opportunities that arise from the failure.”
To understand the opportunities, the first step is acknowledging your situation. Since her Shark Tank fiasco, Taylor has tried to scrutinize what went wrong and how it affected Bibbitec, her bib business.
Initially, she invested more money in Bibbitec to fill the orders that flooded in when the episode aired. But she had to figure out her next move: “It took a lot of self awareness.” Taylor says she considered the harsh advice doled out by the sharks and realized she needed a businessperson to run the company and an outlet for sales — not simply rely upon word-of-mouth praise among moms. Her husband now runs the company and has put in systems to operate it more efficiently. Bibbitec relinquished sales on its website and now sells its bibs almost entirely on Amazon, which markets the products for them. The company expanded its line to seven styles of bibs manufactured in Hialeah, and in 2014 the company sold 3,000 bibs for average price of $22. “We put down ‘failure,’ but it’s the only thing that makes you grow,” Taylor says.
Consultants say turning around failure requires searching for the root cause of what went wrong. “It’s usually not what people think it is,” Harkleroad says. Usually, listening carefully to customers, team members and trusted advisors reveals a clue for how to course correct: “It requires listening to understand, not listening to respond.”
When Jody Johnson expanded her company, ActionCoach Team Sage, by adding more business coaches, sales didn’t follow. She realized she needed to change course and listened carefully to feedback. “I had tried to grow too fast,” Johnson says. “I brought on coaches before I had a marketing machine in place to be able to feed them.” She then scaled back on staff and invested in marketing and tracking results for clients: “Now what I have is exactly the right plan to go forward. I will grow organically and I can bring on another coach when I’m ready.”
Another key to bouncing back is to cut losses early. Whether you’re the guy who introduced McPizza to the McDonald’s menu or the one who expanded Pollo Tropical into an underperforming market, knowing when to give up when the signs are obvious can be critical to long-term success.
“If you take risks, there are going to be bumps on the way,” says Nicholas Castaldo, senior V.P./chief marketing officer at Anthony’s Coal Fired Pizza, former president of Pollo Tropical and a professor at Nova Southeastern University’s H. Wayne Huizenga School of Business. “If a new location or new product is performing way below expectations, it’s better to admit it’s not working and cut losses rather than letting it suck up money, time and focus,” he says. This is particularly true in a corporate setting where failure is less admired and the team leader who misread the market can only recover if he makes adjustments quickly.
After a setback, evaluate your options. You will need to figure out whether to simply pivot or completely shut down operations.
“You have to be decisive but you also have to live with your decisions,” says Vincent Smith, a Miami pharmacist and serial entrepreneur. Smith is on his third attempt at hitting it big with a new product: “I learned you don’t want to go on too long if you’re not making money and you don’t want to be too connected to an idea where you no longer become objective.” Smith says mistakes have given him the chance to bounce back and make smarter choices the next time. He recently raised more than $5,000 on Kickstarter for his newest product, PopScope, a remote control smartphone selfie tripod, which already shows promise: “I just keep driving to that goal of success.”
Take a team approach to reversing failure. Success often requires a team who can cover each other’s blind spots.
“To get that means you sometimes have to give up control,” says Johnson of ActionCoach. “If you get the right people in the positions they are wired for and empower them, that will reverse failure because it is leverage as opposed to you trying to micromanage everything yourself,” he says. In some instances, building the right team could mean replacing or retraining a longtime employee.
Carefully honing a professional network often pays off when your business or strategy fails.
Kenneth Rader and his twin brother Josh Rader founded The Cereal Bowl in 2006. The fledgling novelty concept selling dozens of cereals for about $4 a bowl was unable to survive the 2009 recession when credit tightened and disposable income became scarce. But when the business shuttered, the Raders bounced back by using existing connections and applying learned skills in a new way. Kenneth had met the president of the digital marketing firm where he now works while running The Cereal Bowl and eventually went to him for a job. Josh, CFO of The Cereal Bowl, is a partner at a Miami accounting firm and the president of the Alper JCC.
“Walking away was hard to do, but we made good relationships and gained mentors,” Kenneth says. “Mitigating risk is an important skill that we learned and use even in our current jobs.”
Adds Josh: “You get that ability with failure to look back and see what we should have done, learn from it and move forward.”