27 Jun Lessons Learned: Comments from Those Who Failed
The following appeared in a study, Financial Difficulties of Small Businesses and Reasons for Their Failure, prepared for the Small Business Administration (SBA). They are statements made by individuals whose business was in financial difficulty and subsequently failed. Their comments are listed under the stated reason for failure.
- IRS stepped in and took over the bank account.
- The IRS threatened to repossess [our] tools of trade if [we] did not pay the $20,000 back taxes immediately.
- When the IRS agent told us that they will put padlocks on our doors if we can’t come up with the money in one month.
- Pressure from IRS. The IRS is “merciless.”
- IRS was attempting to reach the non-debtors wife’s income (i.e., levy) for the tax liabilities, which all preceded her marriage to the debtor.
- The IRS changed the locks on the business, and the business had to declare bankruptcy in order for the owners to be able to even get into the building.
- Bank was not going to refinance her business because of divorce settlement.
- Inability to control blood glucose level, cholesterol, etc. due to stress of dealing with creditors.
- His wife has a nervous breakdown. He just knew they couldn’t handle their bills.
- The injury to his arm.
- She could not pay her medical bills. She had filed bankruptcy as soon as she couldn’t pay her bills, rather than get behind in payments.
- Creditors were hounding him to pay his wife’s credit card. He had not canceled the cards after the divorce. He returned his but never closed the accounts.
- “I had lost court case in trying to settle child support but lost. Was given 48 hours to settle $36,000 of debt which was impossible.”
- And, finally, some comments regarding those who suffered a calamity that pushed them into failure, and subsequent bankruptcy.
- The engine blew in the truck and they couldn’t afford to buy another one.
- His van was stolen and he could no longer transport the equipment necessary to carry on his business.
- The organization they were linked with sold out and was taken over by another organization that was hard to work with.
- The gas explosion.
- Death of foreman.
- The State came in and tore up the road.
Despite the above comments, the study also suggests that entrepreneurs are often not the callow amateurs they are portrayed as being, but business veterans who have the gumption to take the risks inherent in starting a new enterprise. They are people who are often prepared to shrug off the effects of a business failure and try again; a process made possible by the “fresh start” philosophy of U.S. bankruptcy laws. Failure does not always have to be viewed negatively. It can offer an opportunity for the entrepreneur to learn and gain from the experience in order to do a better job next time.