Business Failure and Recovery

In the world of women’s business ownership, we tend to focus on big success stories, and with good cause. But what about those who close their doors? As it turns out, not all of the ventures featured in our three-year 1,000 Stories project are open today. In all, about 100 have ceased operations, and the fates of about 10 others are unclear. This is not a particularly large number in a group of 1,000. Consider, for instance, that about half of all new establishments in the United States go under within their first five years, according to the U.S. Small Business Administration’s Office of Advocacy. Still, that’s little consolation for the women who parted ways with their entrepreneurial dreams. Of the businesses in our project that shut down, 18 provided professional services unrelated to finance or marketing, while 16 sold various consumer goods and 10 were in apparel or accessories. Technology was a bright spot; though infamous for being less-than-supportive of women, there were only three closures in that industry. But why did some women close up shop? Did their businesses fail? If so, how did they handle defeat, and what did they do next? Conversations with a number of women in this group show that "failure" can take on many forms, that it's not always defeat, and that it can even lead entrepreneurs to exciting and unexpected places. The End and the Beginning Today's business and management experts often say failure is simply feedback -- an unfortunate but integral part of the journey to success. But perhaps Susan G. Duffy, executive director of the Center for Women's Entrepreneurial Leadership (CWEL) at Babson College, put it best when she says plainly: "I think failure, for everyone, sucks.” A percentage breakdown of closures in our 1,000 Stories project, by industry. Just ask business owner Judi Henderson-Townsend. She launched her first company, an agency representing commercial photographers, in 1986, but it lasted only two years. “It was the first time I had really put my heart into something, and didn’t do well. So it was not only traumatic on a financial level, but emotionally, too,” she told us. Indeed, failure is painful for many female entrepreneurs. "Women tend to ... take it more personally,” Duffy says. “It doesn’t mean that men don’t suffer over failing at business, but women are more likely to say, ‘It was my fault. I didn’t have what it took.’ Men are more likely to say that the environment wasn’t right." And though women and men tend to be just as optimistic about business opportunities, women also tend to have a greater fear of failure, and less confidence about launching ventures successfully, CWEL Research Director Amanda Elam notes. After Henderson-Townsend’s agency went under, she went to work at an emerging dot-com, and her eyes were opened. “I realized these people aren’t any smarter than I am, but they just have a lot more confidence,” she says. “They were all men. Many of them had started businesses before, and failed. They burned through a lot of money, and they just started a business again. It gave me the confidence to get back in the saddle.” Soon after, she started Mannequin Madness. Today, the company earns between $500,000 and $800,000 in annual revenue. Directions Other than Up and Away Succeeding isn’t always about leaning in. Circumstances can -- and often do -- interfere with even the most creative ideas and best-laid plans. And the decision to step away is often borne of other reasons than waning profits or lack of market appeal. In 2010, sisters Andrea and Jana Talavaskova learned that complications with business partners can turn into problems in one’s own venture. They launched Leverage, a bottle distribution company, to gain more control over their professional lives. “We wanted to free ourselves from employment, and give ourselves flexibility,” Andrea Talavaskova says. Based in Slovakia, Leverage imported water bottles from the U.S., then sold them online and through area retailers. It was a successful model that consistently turned a profit. But three and a half years in, the manufacturer of their bottles closed. Though the sisters tried to offer other products in their stead, they were unable to replicate their past success. Those circumstances, and the sisters' desires to explore other industries, led to Leverage shutting down soon after. Meanwhile in Virginia, Kris McMenamin and Susan Barborek of The Legacy Network learned that some people are simply not meant to work together. The duo, both former IBM employees, started their management consulting firm in 2004 as happy partners. “We wanted to own a destiny,” McMenamin says. “We wanted to decide what kind of work we wanted to do, and with whom we wanted to work.” Over the next 11 years, The Legacy Network aided clients of its choosing with the help of several full-time staff and independent consultants, and it was a highly profitable venture. But conflict between the co-founders led them to close shop earlier this year. “We had different expectations for each other, and how we would for our efforts,” McMenamin says. Sometimes women find, after diving in, that entrepreneurship simply isn’t for them -- folks like Jennifer Downing. A full-time mom, she was committed to serving her family organic, locally sourced, non-GMO foods. She saw a market for that approach to meals outside of her own home, and decided in 2006 to found Nourish, an educational company that taught cooking and food selection. Judi Henderson-Townsend. At the height of her business, Downing was teaching more than 50 classes a year. But she says marketing her venture, coupled with the demands of motherhood, became overwhelming. “It was getting to the point where I had to talk about myself all day, every day, and I’m just not interested in that. It’s not who I am,” she says. So Downing scaled way back. The demand is still there, but, today, she teaches two or three classes a year -- tops. Making Peace Everyone who closes a business ultimately moves on to something new. Leverage’s Andrea Talavaskova found a new outlet for her entrepreneurial drive in running Artisara, a fashion retail company that focuses on environmentally friendly clothing. Meanwhile, her sister, Jana, is developing her personal brand as a vegan athlete and author. McMenamin, too, went out on her own to launch a new management consulting agency, McMenamin Consulting Group. Downing, for her part, is at peace with where she is now but is also glad for her time as an entrepreneur. “Sometimes, we moms lose sight in what we’re doing at home, and overlook the skills that we had before we became mothers. My business enabled me to get out there, take a deep breath and again.” Perhaps the ability these women have to learn from their struggles -- and more importantly, to pick themselves back up if they fall -- stems from how they view success. Women in the 1,000 Stories project more often measure success by their ability to help or inspire other people (26 percent) and satisfy customers or employees (17 percent), than by money or profits (8 percent). Amassing years in operation likely isn’t a sign of “making it” for our project participants, either. As Downing sums it up, “What I accomplished, what I taught people, how I inspired people, the friends I made and the people I met -- that’s all success. I consider my business to be totally successful, in its own little slice of the world.” Banner graphic by Rachel Wilson.

Business Failure and Recovery

When It’s Closing Time

The Story Exchange

Business Failure and Recovery

When It’s Closing Time

The Story Exchange

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