Decided to bite the bullet and set up your own business? The good news is you’re not alone. More than 650,000 new businesses were created in 2016 in the UK, and while the numbers aren’t in yet for 2017, they’re likely to be similarly high. In the U.S., meanwhile, a conservative estimate suggests about 400,000 new businesses start each year.
But any successful entrepreneur will tell you that starting a new business isn’t for the faint-hearted. It’s probably one of the hardest things you’ll ever do. Major obstacles and setbacks are almost inevitable. Even some of the best-known serial entrepreneurs, from Jeff Bezos to James Dyson, suffered huge disappointments in their early years.
What can we learn from how these entrepreneurs bounced back from failure? How can first-time founders prevent setbacks from stopping them in their tracks? Here are four lessons from the lives of some of the world’s most successful serial entrepreneurs:
1. Learn From Past Failures
With an estimated fortune of more than £7 billion (roughly $9.8 billion), Sir James Dyson is regarded as one of Britain’s greatest entrepreneurs. But despite inventing the bagless vacuum cleaner and revolutionary hand-drying technology, Dyson’s early commercial ventures almost left him in financial ruin.
One of Dyson’s first inventions was the Ballbarrow, a novel version of the wheelbarrow with a ball instead of a wheel. The product quickly became a market leader within three years. After Dyson’s sales manager stole and sold the design to a rival company, however, Dyson fell into considerable debt fighting patent lawsuits. With the patent only registered under the company’s name and not his own, Dyson soon lost all claim to his designs when he was forced out of the business he’d created.
When Dyson invented the bagless vacuum cleaner in the mid-80s, he vowed not to make the same mistake again. Dyson secured a lucrative patent for his new design under his own name and licensed it to a Japanese manufacturer, which helped bring in enough revenue to get his new company off the ground. Had the entrepreneur not learned those painful lessons from his past trademark battles, he might never have built Dyson into the billion-dollar business it is today.
2. Don’t Be Afraid to Take Risks
Taking risks as an entrepreneur can be scary, especially when they’re big financial risks that involve your own money. However, a quick look at the lives of entrepreneurs like Amazon founder Jeff Bezos shows that risk-taking is part and parcel of creating a successful company. Bezos gambled on a long list of ventures while he was building the “everything store” – many of which paid off, and many of which didn’t.
Bezos’ failed bets include $120 million spent on toys in a bid to break into the toy industry, $175 million on an attempt to dethrone eBay as the world’s favorite auction site, and $175 million on Junglee, a price comparison site that ultimately flopped.
It’s worth noting though that some of Amazon’s gambles turned into its biggest successes. The online retailer’s move into selling CDs and DVDs, followed later by cloud and electronics, made it the world’s biggest online store. Without taking (calculated) risks, Bezos would never have achieved the billion-dollar revenue Amazon does today.
3. Accept Your Weaknesses
As an entrepreneur, you’re often expected to be multitalented, juggling everything from sales and marketing to finance in your new company. However, you will inevitably excel in certain areas while falling short in others. That’s just human nature.
While hundreds of self-help books exist to assist you in fixing your weaknesses, serial entrepreneur Tim Ferris recommends a different approach: spend more time focusing on your strengths instead. In his best-selling book The 4-Hour Work Week, Ferris outlines the lessons he learned from working 14 hours a day building his first business, BrainQUICKEN. By spending more energy on what he was good at, Ferris was able to turn BrainQUICKEN into a profitable business and sell it to a private equity firm for an impressive sum.
“If you try and fix all of your weaknesses, you will be – at best – mediocre at most things you’re inherently poor at,” Ferris said in a 2008 interview.”Focus on leveraging and amplifying your strengths, which allows you to multiply your results.”
4. Make Sure You’re in It for the Long Run
Starting a business from scratch requires patience. If huge profits don’t come in the first year, you can’t get too despondent. Amazon’s first year of profit didn’t come until 2004, 10 years after Bezos started the company in his garage in Seattle. In fact, Amazon’s first two years in business resulted in a $30 million loss, followed by another $1.25 million loss in 1998.
Contrast that with Amazon’s profits in the fourth quarter of 2016, which reached $749 million, and it’s easy to see why entrepreneurs should be willing to play the long game. Bezos built a reputation for sacrificing profits in a bid to grow his company, and his efforts paid off. By sticking with his company and not cashing in too soon, Bezos has seen his decades-long effort to build up Amazon turn him into one of the richest men in the world.
As an entrepreneur you’re bound to encounter disappointments, setbacks, and moments when you feel like giving up along the way. However, the examples of Jeff Bezos, James Dyson, and Tim Ferris show that past failures can give you the grit and determination you’ll need to find business success.
Steve McGerr is the head of direct commercial for Hiscox UK.