If at first you don't succeed, learn from the experience. The knowledge acquired when things don't work out can often lead to a more fruitful future than you ever could have imagined, says Paul Pivcevic.
Sir John Harvey Jones is on the line. 'The most common failure in business is that people don't abandon early enough.' The voice is quavering a little now, but the passion still burns. 'In the UK, it is considered a mortal sin to fail, so it's one shot and you're out. So people hang on and hang on until the waves start breaking over the stern, and then they lose everything.' He adds: 'The art is as much in recognising when to bloody well get out.'
It's an art that the Government would very much like us to learn. Peter Mandelson, presenting a DTI white paper last year, spoke boldy of how we fear failure in Britain. Not that we escape it - more than 11,000 companies have failed since the beginning of the year, a year-on-year rise of more than 20%. But the Government is determined to make bankruptcy less painful for those who will at least take intelligent risks - and follow Harvey Jones' advice to fold when there is still something to share round.
Kevin Main, now a management consultant in his own practice, may be a good example. His business, screen printing T-shirts and sweatshirts, which he started from his college bedroom when a student, went into voluntary liquidation after five years. It had clocked up losses, but was still making month-on-month profits. That was in the summertime. Winter's falling demand, and higher stock prices, would surely have driven him and three staff into unsustainable loss. However clear the writing on the office wall, nothing could lessen the emotional impact of failure.
'It was indescribable. I was exhausted with trying to save the show. But I had some proper business advice towards the end, so everything did become clear. We took a lot of care to follow the procedures correctly in appointing liquidators, so that we would be responsible to our creditors. Then one of the creditors came up with a procedural device for changing the liquidator. That was like a punch in the stomach. But the new liquidator was great, and told me how to look after myself.'
The tension was not over yet. Letters went out. After dealing with a range of creditors in a variety of moods, the questions started flooding in. 'All of a sudden you have time on your hands. There's a lot of time for reflection.
'I signed on as unemployed. That was ghastly. Since I hadn't signed on for two or three weeks, the guy didn't believe I wasn't working. He accused me of being dishonest. But my sustained confidence wasn't damaged.'
Not so for Gerald Ratner, who made the infamous remark that the jewellery sold in his shops was 'crap'. He was devastated by the public outcry that followed. 'After you've been a tabloid punch-bag, with them saying what an idiot you are, after a while you believe them. My self-esteem was low for a long time.'
In a bizarre twist, the year Ratner's jewellery business went under it made £125 million profit. 'It was hideously depressing. Everything I had spent my life building up, I lost. It was very difficult to start over again. Everyone turned me down for the money.'
Four years in the wilderness followed. But Ratner discovered that one of the richest towns in the country, Henley-on-Thames, didn't have a health club. He had to approach six banks before a local NatWest obliged. His new venture, The Workshop in Henley, is almost two years old with profits of £300,000 to £400,000.
'Before I even signed the lease on the building, I advertised in the local paper and recruited 500 members,' says Ratner. 'This time round I wasn't going to do anything to upset the apple cart.'
He sounds slightly surprised as he describes a changed man.
'I used to be a complete megalomaniac, very ambitious, very competitive. My ambition has gone. In the old days, if another jeweller opened I'd do everything to put him out of business.'
Mark Goyder, director of the Centre for Tomorrow's Company, is sympathetic to managers who make mistakes. 'We tend to talk about the inclusive approach to business as though it were a journey. The imagery of a journey implies we're learning all the time about how to run a company better. It seems to me that wrong turnings are an inevitable part of journeys.
'And never mind about anybody else's agenda,' he continues, warming to his theme. 'Put your trust in your ability to learn from your own experience. Building success is about following your convictions, not following the crowd.'
Sophie Mirman, who ran Sock Shop until 1990, reached a state of detachment when her company was with the administrators. 'We had gone through hell - photographers were hiding behind cars at our warehouse trying to catch me in tears or at a vulnerable moment at the time we were trying to save things. Sock Shop was a high-profile company. When the administrators were appointed and it wasn't under my direct control, I found I could step back, look at it dispassionately, and look at the reasons it had gone wrong - the jump in interest rates from 7% to 15% in a year, the demands from the City for regular huge expansion, and so on.'
Resisting a strong urge to move to the quiet life in the country, Mirman now runs two London shops selling children's clothes, toys and books, and a mail-order business, all under the name of Trotters. Turnover between the two stores is £4 million; the mail-order business is projected to turn over £600,000 this year.
'It was a very difficult decision to move on - it was our baby we were giving up. But I don't know whether I could have done it if my partner and I hadn't been going through the same hell together. It must be extremely difficult if it's only one partner going through it.
'But then we got a lot of letters from people who said they were going through, or had gone through, the same thing, and a lot of nice letters from the press.'
Both Main and Ratner believe support is essential for bouncing back.
'You realise family and friends are all you've got,' says Ratner.
Main remembers: 'I was surrounded by people trying to help me. I never considered myself a failure, I just had to learn.'
And learn he did. His next idea was to produce a comic book teaching road safety to children aged seven to 11. He enrolled on a three-month business start-up course at Durham University.
'You've got all these Yorkshiremen grilling you, telling you that your plan's a load of rubbish, taking it apart, and at the end sitting back and telling you that you had a really good chance,' says Main.
This business also failed to take off, but it didn't run into debt, and Main finished this time without creditors. 'Learning from failure can mean learning the lessons, or it can mean learning not to take the risk again,' says Kemp. 'The key is to see failure not as an event but as a process. You have to face up to failure, face any self-judgment, despair or hopelessness, and realise these feelings come from the part of us that is unresolved. And then move on.'
'You have to think that what you're going through is short-term,' says Mirman. 'It's a question of persevering. I find that although I'm much more cautious, and tread very carefully, I have a better balance in my life - a better perspective.'
Dispassion, perseverance and a bright idea. The often-quoted remark of Thomas Edison, the inventor of the light bulb, springs to mind. He had been branded a failure for having tried to make the bulb work in 25,000 different ways, but he simply retorted: 'Now I know 25,000 ways that I haven't yet succeeded.' Think too of the ancient saying of those mystical Muslims, the whirling dervishes, who describe joy as the shock of sudden disappointment. Try then to take comfort from the possibility that today's failure might just be saving you from tomorrow's catastrophe. l
LESSONS FROM THE FALL
- Entrepreneurs should ask themselves: Is running a business what I really want to do or would I be happier with the stability of a paid job?
- See failure as an opportunity to learn and something that will pass.
- Be ruthless about your strengths and weaknesses.
- Don't blame yourself - it's not that you didn't do enough, but almost certainly that you didn't do enough of the right thing.
- Seek out support from wherever you can get it, and remember, it's never too late to start again.