Exploring Why Fear of Failure Holds So Many Entrepreneurs Back
Although dozens of the world’s largest corporations have sprouted up out of American soil, the United States is mostly built on the backs of small businesses – and it always will be. Entrepreneurship is so deeply embedded in the DNA of this country that it’s difficult to imagine a time when ambitious individuals would ever cease to launch startups and build businesses. Yet if there’s anything that could hold Americans back, it’s fear. In particular, it’s the fear of failure.
How Fear of Failure is Stifling Entrepreneurship
There are improbable fears, and then there are real fears. Unfortunately, business failure falls into the latter category. Any time an entrepreneur starts a new venture, there’s always the risk that it could blow up in their face. The statistics don’t work in your favor.
According to the research of thousands of American companies, failure is common and likely. Roughly 20 percent of small businesses fail in the first year, 30 percent crash in the second year, and half of all small businesses cease to exist after just five years. If you fast-forward to a company’s tenth anniversary, only 3 out of 10 will still be in business.
These aren’t just statistics from a single isolated study. These data points have remained remarkably consistent over the decades, and this means year-over-year economic factors aren’t to blame – it’s a universal law.
All of that to say this: Failure is very much a reality for any small business owner. And unfortunately, this has led many would-be entrepreneurs and innovators from starting their own companies. It all comes down to a paralyzing fear of failure.
Many individuals have fresh ideas for products or services or even a knack for casting vision and leading other people. Still, they shy away from taking chances because they’re scared of what will happen if they leap out of the proverbial airplane, and there’s no parachute to glide them to the solid ground gently. No matter how much we try to talk ourselves into taking chances, our conditioned brains hold us back.
Fear of failure is a decidedly human characteristic. Dogs don’t shy away from chasing after a tennis ball for fear that they’ll drop it and look ridiculous. Birds don’t procrastinate on building nests because of the possibility that it won’t work out. Nope – it’s just us humans. And the sooner we understand how it impacts us, the faster we can move on.
The Psychology Behind the Fear of Failure
“Fear of failure is the cognitive, emotional, and behavioral reaction to the negative consequences you anticipate for failing to achieve a goal,” neuropsychologist Theo Tsaousides, Ph.D. says. “It is the intense worry, the negative thinking, and the reluctance to take action you experience when you imagine all the terrible things that could happen if you failed to attain a goal.”
Fear of failure influences every decision we make in one way or another. Sometimes it’s a little influence, and other times the ramifications are significant. When it comes to starting a business, people with a high dose of fear of failure tend to focus their energy and efforts on preventing losses, rather than achieving gains. All this leads to safe, conservative decision-making that rarely, if ever, leads to a successful and sustainable business.
Fear of failure looks different for every person, but it’s generally tied to one or more of the following factors:
- Embarrassment. No one wants to fail. Our entire lives are built on propping ourselves up and trying to look good in front of other people. We see failure as an embarrassment and will do anything we can to avoid it – even sit on the sidelines.
- Low Self-worth. Intrinsically, we see failure as a referendum on our self-worth. If we fail, it must mean that we don’t have what it takes to be successful. It is sobering to think about, so we’d instead not take chances that could force us to evaluate our worth.
· Irrelevancy. We all crave relevancy. Success is a big deal in our culture. Streets and buildings are named after people. High net worth individuals get the opportunity to speak at conferences and write books. But while winning is enticing, we’re all terrified of the shadow side of things – i.e., the perceived irrelevancy that comes with losing.
· Disappointment. Sometimes it’s just the disappointment of possible failure that drives our fears. We know how much we want something and are afraid of the fact that a letdown could be on the other side.
· Tangible losses. Sometimes the fear of failure is tied to substantial losses. For example, you might think to yourself, “What if I put $100,000 – my entire life savings – into this business and it fails? I’ll have nothing!” Or you may be fearful of losing your house or your retirement. These are very persuasive fears, and they can mess with your ability to think and act clearly.
Fear of failure is rarely one-dimensional. Most people experience a combination of feelings, emotions, internal doubts, and external anxieties. When you toss all of these elements into a single bin, you get a paralyzing concoction that makes it nearly impossible to push forward.
Entrepreneurs: How to Move Past Your Fear of Failure
If you’ve ever attended a Tony Robbins seminar, read one of his books, or listened to him interviewed on a podcast, you’ve heard him say that humans will do more to avoid pain than we will to gain pleasure. You know this to be true in your own life. You’ve seen it play out thousands of times over again throughout the years. If you want to be successful and enjoy the many benefits of building a business, you eventually have to break out of this cycle. Here are some recommendations:
1. Identify Your Greatest Fear
It’s helpful to start by identifying your single greatest fear. In other words, what’s the number one aspect of failure that’s holding you back from starting a business. It’s different for everyone, so you’ll need to perform a careful self-analysis. Once you’ve identified this trigger, you’ll have a better understanding of why specific thoughts dominate your thinking.
2. Understand Why Businesses Fail
Businesses rarely fail without a discernable reason or specific cause. Research shows that there are 20 reasons why startups experience premature failure.
In a study of 101 startup postmortems, CB Insights has found the following factors to blame (with percentages indicating the number of businesses that were at least partially impacted by the issue): no market need (42 percent); not the right team (23 percent);ran out of cash (29 percent); get outcompeted (19 percent); pricing and cost issues (18 percent); product without a business model (17 percent);user un-friendly product (17 percent); poor marketing (14 percent); ignoring customers (14 percent); product mistimed (13 percent); lost focus (13 percent); disharmony among team/investors (13 percent); pivot gone wrong (10 percent); lack of passion (9 percent); failed geographical expansion (9 percent); no financing/investor interest (8 percent); legal challenges (8 percent); didn’t use network (8 percent); burnout (8 percent); failure to pivot (7 percent).
There are dozens of factors that can play into business failure, but it’s helpful to know what you’re up against. You won’t be able to counteract every circumstance; however, you can plan, so that significant issues are less likely to lead to your startup’s demise.
3. Consider the Worst-Case Scenario
You don’t want to ruminate on failure too much, but there is value in conducting a worst-case scenario exercise. With this exercise, you consider your most significant fear (which you’ve hopefully already identified) and then imagine that it comes true in the worst fashion. In doing so, you’ll likely realize that your worst-case scenario – which highly unlikely to occur – isn’t even that bad.
Once you realize that an unlikely worst-case scenario won’t result in your demise, it frees you up to think more optimistically. Suddenly there’s a baseline to your failure. In all likelihood, you’ll end up somewhere far above this threshold.
4. Put Yourself in Definitive Situations
If you’re deathly afraid of failure, it probably means you’ve been scarred once or twice in the past, but no longer take chances. The quickest way to move past this constraint is to put yourself in situations where you succeed or fail and get immediate feedback. Below you can find are some examples of things you can do:
- Try the Coffee Challenge. Popularized by entrepreneur Noah Kagan, the Coffee Challenge is a frequent and innocent exercise where you walk into a coffee shop and request a 10 percent discount on your order. Then you wait and see what happens. It forces you to get uncomfortable and take a chance. And while the stakes are very low – you either get denied, or you save a few pennies – it’s the experience that shapes you.
- Ask a stranger out. With digital technology, we seem to have lost the art of engaging with strangers in a face-to-face manner. Regardless of whether you’re a guy or a gal, find an attractive person, and ask them out to lunch. Don’t be creepy or sexual about it – make an honest ask. If you get turned down, you’ll realize that it isn’t the end of the world. If the person accepts, maybe you’ve just started a new relationship?
- Give a business pitch. Next time you’re in an elevator, ask the person next to you if you can tell them about your business idea. Proceed to give them a 30-second pitch and then ask for feedback.
These are just three examples. The point is that you need to put yourself in scenarios where there’s a minimal delay between execution and results. It allows you to improve and refine your approach quickly. Keep a detailed journal of these successes and failures so that you can look back on them at a later date and time.
5. Surround Yourself With the Right People
There’s a commonly held belief that you are the average/combination of the five people that you spend the most time. Thus if you want to stop being afraid of failure, you need to spend time with people who embrace challenges and take chances. Not only will their attitudes spill over into your way of thinking, but they’ll also challenge you to make crucial decisions and hold you accountable for how you respond.
6. Get Over Yourself
The final suggestion is short and sweet: Get over yourself. You aren’t that important. Nobody else cares if you fail, nor will they remember in six months or a year. Everyone is so focused on themselves that you get a free pass. That’s liberating!
Squash Your Fear of Failure
Your fear of failure is holding you back from becoming the best version of yourself that you can be. It’s keeping you from starting a business, finding financial success, and even developing healthy relationships. In particular, your fear of business failure is:
- Forcing you to play it safe. You might start a business, but you don’t take any chances. You only implement new steps and actions after you’ve carefully calculated all of the risks and done your best to neutralize them. There’s no originality in your approach – everything is a carbon copy of successful things other businesses have done.
- Limiting your chances to scale Whenever your business experiences a new level of success, you settle in and put things on cruise control. As such, there’s no opportunity for further growth.
- Capping your earning potential
- By playing it safe and refusing to scale to a meaningful level, you put a concrete ceiling on the amount of revenue your business generates (as well as the profits you place in your own pockets).
- Increasing your stress level
- The more you let failure dominate your decision making, the higher your internal stress and anxiety levels become. If you are not careful, it can lead to severe physical and mental health issues.
The good news is that we’ve meticulously outlined some of the specific ways you can counteract your fear of failure and enjoy the abundant harvest that entrepreneurship yields. Now is the time to take a step of faith in spite of the unknown. Will you?