Ambitious entrepreneurs, upon starting a business, try to live and work as if that business is everything. They put all their money, time, and resources into growing the business, and truly believe that if they work hard enough, the business will carry them to success.
That’s not a bad way to progress, but it’s important to realize that roughly 50 percent of businesses fail within the first 5 years of operation. If you want to maximize your chances of long-term success, you’re going to need some kind of backup plan.
Preparing for a Potential Failure
What will you do if your business fails? There are many options available to you, but it’s wise to think about which of these options best appeals to you—and possibly start working on one in the meantime:
- An alternative business. Many failed entrepreneurs go on to start another business, and oftentimes find success. Failure teaches you important lessons, which you can apply to the development of your next enterprise. This is certainly a viable option, but what kind of business would you think of starting? Where would you go from there?
- Specific licensing and certifications. You could also start working on specific licenses or certifications you’d need to practice another career. For example, it’s possible to get your real estate license online, thanks to online learning materials and tests.
- Education and training. If you’re looking for a more generalized career path, you could go back to school and get a degree in something like accounting, or take classes in something like programming to develop a niche skillset.
- Personal branding. Of course, if you’re not sure what direction you’d like to head in the event of business failure, you could go a more generic route and start developing your personal brand. A strong personal brand can help you succeed in almost any area, giving you a more prominent reputation and connecting you to valuable resources.
The Advantages of a Backup Plan
Initiating a backup plan is about more than just giving yourself a safety net if your business goes under. There are multiple benefits to keep in mind:
- Alternative options. If your business is no longer developing the way you intended, you’ll have an alternative option. If it fails, you’ll have a backup plan to which you can seamlessly transition. If you start to lose interest, you can spend more time on your alternative choice. It never hurts to have multiple backups on standby.
- Extra income streams. In many cases, you’ll be able to pursue your “backup” plan in tandem with your main business, assuming you have the extra time and energy. For example, if you get your real estate license, you can buy and sell houses at the same time you’re running your main business. If you manage to do this successfully, you can cultivate multiple simultaneous income streams, which can help you build wealth (and eventually retire).
- Networking possibilities. Whether you’re going to classes, getting your certification, or actively practicing your backup plan in the field, you’ll get the opportunity to meet lots of different people. And as you likely already know, networking is one of your most important keys to success. Through networking, you’ll be able to find and connect with the people who can help your business grow, and learn new skills and insights you might never be able to gain on your own.
- Personal development. Pursuing multiple career paths, or at least career options, is also valuable for your personal development. Each new skill you add to your resume and each new experience you find is going to improve your character—and make you more valuable, both to other people and in your own life. If you’re trying to be a well-rounded human being, or if you’re just trying to be happier, pursuing alternative work options could be exactly what you need.
- Prevention of burnout. No matter how passionate you are about entrepreneurship, or how much it seems like you’ll want to do this forever, eventually you could reach the point of burnout—the point of no longer wanting anything to do with this business. But if you divide your time evenly between this business and an alternative course, you’ll be far less likely to “get sick” of the core business. It’s much more than just hedging your bets.
So what are you going to do if this business doesn’t develop the way you think it will? You don’t need to have a fleshed-out, 5-year plan, nor do you need another job lined up right now. Instead, simply acknowledge that there’s a chance this won’t work out as you intend, and think about the general course of your career if the worst happens.