Hardship Teaches 3 Valuable Lessons for Business Owners

More businesses are failing as difficult times add strain to entrepreneurs. The only way to thrive is to adapt and learn from mistakes.

This hasn't been an easy year for investors, no matter which market you look at. The U.S. stock market has seen its worst setback since 2008, and markets like crypto and major currencies have also failed to recover. With fears of an imminent recession starting to grow from businesses and investors around the world, belt-tightening is becoming the norm.

If you are an entrepreneur whose business it's in the early stages, you might have noticed these effects already. According to Crunchbase, August of 2022 was the worst month for global venture funding since 2020. With only $25.2 billion raised last month, startups have already been forced to reduce costs by closing offices, freezing hiring, laying off employees, and ceasing operations. However, there are lessons to be learned from hard times.

1. What Goes Up Must Come Down

Over the past years, startups around the world have experienced a bonanza as investments have prospered. Not only did 2021 see the second-highest rate of new entrepreneurs of the past 10 years, but a record for venture capital funding was also broken. Now that the joy of endless cash is over, entrepreneurs have to make a better case to raise funding at all stages of their business development. This, in addition to the increasing layoffs, means those who were not ready for a bad situation might very well find themselves out of business.

Markets and businesses tend to be cyclical; as such, every entrepreneur should remember that good times don't last forever. However, it's important to stay focused and prepared for when things start showing signs of life. For example, if you are involved in real estate, pay attention to mortgage news. This way, you can ensure you are getting the best projection on where rates could go. You can also be certain that you are setting yourself up for success during this time of economic challenge. 

2. Different Times Require Different Leaders

Leadership is one of the most important qualities when it comes to getting a business off the ground. With the current financial crisis, many entrepreneurs have come to realize this the hard way. This has prompted many to bring outside executives to their businesses in an attempt to have a new perspective and navigate the lack of funding.

While this can be a good idea, bringing in just any executive won't do. Different times call for different measures, and different leadership is required to follow through with specific approaches. Determining if your company needs an artist, builder, fixer, or strategist is essential to ensuring the right measures are taken.

More often than not, entrepreneurs find themselves using a leadership style that just doesn't come naturally. Whether this is due to inexperience or the feeling that they have to, this can be a lost opportunity. By finding their true leadership style, entrepreneurs can better understand when times warrant a new perspective and when they don't.

3. Innovation Without Practicality Is Not Enough

We have grown used to thinking that startups and entrepreneurship are all about innovation rather than invention. While there is a good reason for this, it is not unusual for entrepreneurs to forget about the practicality of their innovations. It has become increasingly common for startups to take years to create a product or service, only to find that it can't actually be used by potential customers.

Take the case of computer vision as an example. Providing computers with the ability to process valuable information from digital images is one of the most promising technologies of our decade. However, applications of this technology have remained inaccessible to the average user and even corporations.

But startups like Due Dilly, for example, have taken a different approach by ensuring their technology is easily accessible. The company developed software for Android and Apple that can assess collectibles with just as much precision as professional human graders. All it requires is for the user to take a picture and the computer vision technology takes care of the rest, bringing innovative technology into everyday life.

Be Willing to Learn

While learning the need for preparation, great leadership, and practicality is important, entrepreneurs also need to be adaptable. During times of hardship, everything isn't going to go the way you want it to. You won't be able to predict the state of the world, but you can control how you react. Roll with the punches and remain true to your goals. You'll experience success if you remain resilient and learn the valuable lessons that only hard times can teach.

 

This article was written by John Hall from Inc. and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.