Statistics tell us that businesses fail all the time in Northern Ireland. Latest figures from the UK’s Insolvency Service show company insolvencies rose last year to 326 in total.
But what the statistics do not tell us is that sometimes businesses fail for the right reasons. Some might argue there is no such thing as a “right” reason for a business to fail. But the evidence would suggest otherwise.
Naive
It is not difficult to find lots of examples of people in the North who did not think things through properly or who were a little naive.
Consider, for example, many of the successful family firms who thought investing in property might be a good idea and so put their sound business arms under threat from speculation.
There is a never ending list of reasons why businesses fail nearly every day of the year.
It can be any one or a combination of: poor planning; growing too slow or too fast; lack of management; falling out with your business partner if you have one; not understanding the market or the competition; or choosing the wrong location for the business.
They will eventually all deliver the same result: failure.
But all of these variables aside, there are some businesses that flounder for what could be described as the wrong reasons. Perhaps they had an unsupportive bank or lender behind them. There are also plenty of local examples of businesses that have struggled because head office policy has changed or because they were the victims of someone else’s bad luck.
If that was the case, should the people behind these failed businesses be given a second chance if they want to try again?
Well that is exactly what a new European Union funded initiative hopes to do in Northern Ireland when it launches later this year.
The Value of Failure project wants to change attitudes about business failure not just in the North but across Europe and to encourage business people who failed first time around to try again.
The project will be managed and delivered by a partnership led by the University Szczecin in Poland, Enterprise Northern Ireland, Visionworks, Germany, and Lisburn-based Canice Consulting.
What it hopes to develop is a “Second Chance Entrepreneurs Alliance” that will provide support through tailor-made education, training and by creating an integrated framework of backing from what it describes as the “relevant” stakeholders from government to business communities and banks – all at regional levels.
The organisations behind the Value of Failure project argue there is a “clear economic and social rationale” to giving failed entrepreneurs a second chance and they want to educate banks, micro credit and finance providers to think differently about people who have failed in business first time around.
Failure rate
“First and foremost, businesses set up by re-starters grow faster than first timers in terms of turnover and jobs created, and approximately one-fifth of all successful business people failed first time round.
Secondly, most of the time, business failure is not due to the incompetence of the entrepreneurs.
“Thirdly, Europeans as a whole are relatively risk-averse, especially compared to countries such as the USA,” they argue.
According to the Value of Failure partnership team there is a “stigma” attached to business failure that needs to change and if everyone was more open to embracing the concept of “honest business failure” it could help to create new jobs and new opportunities not just for entrepreneurs who have previously failed but for the communities to which they belong.
