Part of the folklore about successful entrepreneurs is that they succeeded because they first failed. “Fail fast,” entrepreneurs are often told, and you’ll learn valuable lessons that will help you in your next venture, The Wall Street Journal reports.
But this is a myth. While second-chance stories are comforting, research shows that entrepreneurs don’t learn from their mistakes.
Mostly, what passes for evidence to support this myth are the cherry-picked stories of famous failed entrepreneurs who became successes later on. This collection of tales conveniently leave out the far greater number of entrepreneurs who failed and didn’t become successful at all. In the U.S., only about 50% of startups make it to their fifth birthday. Even fewer make it into adolescence or adulthood, according to the Bureau of Labor Statistics.
According to a study of 8,400 German startups, entrepreneurs who failed at their first go-around were more ikely to go bankrupt or dissolve their business than first-time entrepreneurs. Even if an entrepreneur had run a business successfully before, they were just as likely to see their new business fail as a first-time entrepreneur.
Part of the reasoning behind repeat failures is that it’s difficult to learn from a failed venture because, unlike so many other situations, there are infinite factors that could contribute to a business’ demise.
The best way to prevent repeat-failure is to hold a “premortem” and try to workshop all the ways a business idea could go under—before getting it off the ground. Read the full story.
