Bouncing back from failure

When it works, it's fantastic. The satisfaction of building a successful business is immense. The self-belief and commitment it takes to set up a new venture are repaid with interest. But what if things go wrong?

"It is soul destroying when your business fails. You learn a lot about yourself when everything is going completely wrong. You have to take a long hard look in the mirror," says Adam Pritchard, managing director of RJA Foods, who went through two business failures before finding success with Pomegreat, a pomegranate fruit juice.

For many, the response would be to return to the comfort and stability of the regular wage. But for some entrepreneurs, the response is to pick themselves up and try again. They see failure as a temporary aberration. It isn't the end of a dream, but a useful lesson along the road to eventual success.

Mike Southon, a successful entrepreneur and author of The Beermat Entrepreneur, says that entrepreneurs have a different attitude towards failure.

"If you talk to entrepreneurs about failure they just don't listen. They don't countenance the thought that their idea might not work. If it does end up failing, it is never down to them, it is down to some other factor: the market wasn't ready or they had dodgy suppliers, for example. In the meantime they move on to the next venture. It's that ability to bounce back after a failure that is the hallmark of a good entrepreneur," he says.

Southon didn't experience failure until relatively late in his career. His first venture was an IT training company called The Instruction Set, which he set up with friends. It was a huge success and in 1989 they sold out to Hoskyns (now Cap Gemini Ernst & Young). Over the course of the next decade, however, he was involved in 17 start-ups, only two of which achieved anything like the same level of success and three of which were complete failures.

One venture was a business that made disposable speakers out of cardboard, perfect for promotions and giveaways. Or so he thought. The problem was that although lots of people loved the idea, no one was prepared to actually part with any money for the speakers.

He says it was a simple lesson but one that he says entrepreneurs too often overlook: "If it really is a good idea, you will be able to sell it. If you can't sell it, it's not because there's a problem with the customer, it's because there's something wrong with the idea."

Gary Frank realised that there was a problem with his idea after he spent a year selling American-style doughnuts in London and Oxford. His sales were £45,000 over 12 months - a loss of £10,000. He realised that although he loved them and they are sold in every corner shop in the US, there just wasn't a sufficient market for American-style doughnuts in the UK.

But instead of packing up and going home, he spoke to his customers about other products that might sell better. He came up with American-style muffins and flapjacks and changed the company name from Delicious Doughnuts to the Fabulous Bakin' Boys. Now, 15 years later, he employs 170 people in Witney and is aiming for a £17m turnover in 2006.

The doughnuts weren't Frank's first taste of failure. He spent five years in New York as a futures trader, but lost everything in the 1987 stockmarket crash. He spent a year on the dole before hitting on his doughnut idea.

Crucially, he says that the lessons of earlier failures made him more prepared for his eventual success.

"The year I spent on the dole was part of the healing process after what happened in New York. It took that long before I was ready to find my feet again. What spurred me on was that I was already at rock bottom, so I had nowhere else to go. No matter what happened it couldn't get any worse. Secondly, I'd already had the experience of failure and I knew I could get through it. In hindsight, it gave me a tremendous edge," he says.

Not every entrepreneur reacts to failure in the same way. After his first company went into liquidation, Nick Porter scaled back his ambitions.

The 38-year-old managing director of Manchester-based events organiser Fresh lost £19,000 when his first company, a design agency called Two Men and a Mouse, collapsed in 1997. His response was to go back into regular employment in order to learn the skills that would ensure he didn't make the same mistakes next time.

He continued to dabble in his own ventures on the side, but with limited success. He set up a pound shop, called Mop Shop, with a colleague. It started off quite successfully. He opened a second; that one did OK, too. But by the time he opened the third, the market for pound shops was overcrowded and sales began to slide. He decided to liquidate the company and minimise his losses.

It wasn't until August 2004, three-and-a-half years after the failure of Mop Shop, that he felt confident enough to put his future on the line again.

"When things started to go wrong with Two Men and a Mouse I wasn't as mature as I could have been. I was young, I was earning good money. I'd got complacent and didn't put enough focus into where I wanted the business to go. But it was a fantastic learning curve.

"It made me realise that there were gaps in my experience that I needed to fill. I sat down and planned where I wanted to go and the experience I needed to get there. I realised it would take four or five years to get that experience, but I knew that at the end of it I'd be much better placed to make a success of it," he says.

And he has made a success of it. Fresh achieved sales of £2m in its first year of trading and clients include Makro and Goldsmiths the Jewellers. But he couldn't have done it without that earlier experience.

"It taught me to plan what I wanted to do. My first business was built on luck and good timing, both of which ran out. This time round I've made sure the foundations are deeper and stronger," says Porter.

A lesson in entrepreneurial persistence

Like those two entrepreneurial knights, Sir Richard Branson and Sir Alan Sugar, school didn't hold much joy for Adam Pritchard.

The 32-year-old founder of RJA Foods left school at 16 with only a handful of GCSEs. He realised that he would have to make his own success. But he failed as a stockbroker and his first two business ventures both collapsed, leaving him homeless.

"I thought I'd spotted a gap in the market to supply cars to rich people who didn't have time to do it themselves. I didn't really know anything about cars, but I set up a company called Motoresolve and put adverts in car magazines and the national newspapers," he says.

"One or two people were interested, but because of my lack of experience and contacts I wasn't able to source them the cars that they wanted. It lasted about six months before I had to shut down. I lost about £30,000 and had to move out of my flat," he recalls.

He then trained as stockbroker but by the time he'd qualified the trading floor where he wanted to work was wound down. Pritchard ended up doing a different stockbroking job, which he hated. But it spurred him on to his second attempt at being an entrepreneur.

"It was a telephone counselling service with a premium rate number. We turned our front room into a counselling call centre with two counsellors. But that lasted four months before I pulled the plug, losing £50,000 and having to move flat again," he says.

Still stuck in a stockbroking job he hated, Pritchard took some time out for a holiday in Asia. While visiting Pakistan he fell in love with pomegranate juice, largely unheard of in the UK.

Inspired, Pritchard postponed his return to the City and instead spent hours in the library researching the fruit juice market. He spent a year searching for the perfect pomegranate supply and worked with drinks industry experts to achieve the perfect blend of juice.

Pomegreat launched in 2003 and although the business almost went under twice in the first 12 months, he persisted and by the end of the year it was achieving sales of 150,000 litres per month.

"It took me a while to believe that it was going to work, but you just have to stick with things you believe in. Even if it failed, I'd know I'd done everything I could to make it a success," he says.

Pritchard needn't have worried. He is a lesson in entrepreneurial persistence.Today, he is managing director of a £5m company that employs 25 people and Pomegreat has become the fastest growing juice drink in the country, selling 850,000 litres per month.