If at first you don’t succeed – Entrepreneurs who experienced failure before succeeding

“Successful people don’t fear failure but understand that it’s necessary to learn and grow from.” -Robert Kiyosaki

US Presidential candidate Donald Trump does not shy away from media attention. He regular reminds the US public of his wealth and how successful as a businessman he is. However, it hasn’t always been plain sailing for Mr Trump who began his business career working for his father, Fred Trump, who was already a successful real estate developer.

Having built up a small business working for dad, in 1980 Donald Trump established the Trump Organisation to oversee his real estates. In 1988, Trump acquired the Taj Mahal Casino in Atlantic City which led to spiralling debts and by 1989 Trump found himself unable to meet loan payments. Although he secured additional loans and postponed interest payments, increasing debt brought Trump to bankruptcy by 1991.

Mr Trump’s business didn’t almost fail once, but twice. Following closely behind the first, Trump got himself into personal debt of $1bn. Luckily for trump he had significant assets and he managed to make the most of what he had at his disposal to make it back to the top, and how we hear about that!

This article made me think, what other famous entrepreneurs have had a rocky road to their riches? When I meet with anxious directors for the first time they often tell me the lessons that they have learnt from their mistakes and how they would make different decisions in hindsight. As it happens, a number of these individuals go on to run successful businesses.

entrepreneurs failure before succeeding

I often remind clients that Richard Branson hasn’t always been as successful as he is now.

Branson’s first venture was a student magazine, which he was later arrested for as he broke laws prohibiting the publication of advice on remedies for venereal disease. After this brief foray in the media he established the Virgin Records shop, which experienced continuous cash-flow problems and it was reported that to pay off an overdraft, Branson pretended to buy records for export to escape the excise tax on sales.

Virgin Atlantic was later founded in 1984, starting off with one jumbo jet for a year. During the Government certification flight, birds flew into an uninsured engine, resulting in an explosion. Branson had to liquidate cash from his overseas financial subsidiaries to reconstruct the company. After a court battle with British Airways – Branson claimed they played dirty tricks to steal passengers – rising fuel prices and the economic environment of the 1990s, Branson had to sell Virgin Music in 1992.

From the 100+ companies that Mr Branson has formed he has had 14 failures, which in respect to him, is a admirable statistic.

Henry Ford – Ford Motor Co.

Henry Ford’s first venture, the Detroit Automobile Company, went bankrupt in 1901 due to its high prices and low quality products. However, Ford didn’t give up, instead he re-organised his first company to construct a new one, Henry Ford Company. Unfortunately this company subsequently collapsed due to a dispute with a business partner.

Upon Mr Ford’s third attempt he almost faced failure yet again because the low sales achieved made it impossible to pay back investors. Moments before his yet-to-become empire collapsed, the company was saved by angel investors, the rest is automotive history.

Lawrence Ellison – Oracle

Ellison dropped out of the University of Illinois and worked as a programmer in California for eight years. He later pursued a business with his former boss and set up Oracle Systems Corp. The company initially got off to a rough start, and the partners struggled. Ellison had to remortgage his house to obtain credit, and in 1980 Oracle still only had eight employees. Fortunately, it was around this time that Ellison stumbled across IBM’s research paper on the programming language SQL. He chose to rewrite the software to be run on any computer and when IBM released its SQL supported products in 1981, Ellis was ready and Oracle boomed.

However, Oracle started making promises it couldn’t keep, and by 1990 the business was once again at stake. After the launch of its 6.0 version, it lost over $28.7m as clients couldn’t run it because it was infested with bugs. Deciding to start over again, Ellison fired everyone on site and put together a new management team. They liquidated accounts, tightened financial control and created a system which awarded sales reps when a product was shipped.

Colonel Harland Sanders – KFC

Best known as the man in the Kentucky Fried Chicken logo, Colonel Sanders was fired from a dozen jobs before he started KFC. It was in 1967, at the age of 65, that the Colonel found himself broke, mostly due to the construction of a road that put him out of business. At the time he was living in his car and driving to over 1,000 restaurants trying to sell his chicken recipe for a nickel commission on each chicken.

It was only at the age of 75 that Colonel Sanders sold his chicken restaurant business….for $15m. Although the Colonel did not find fame before he died at the age of 90, his legacy has continued through the KFC logo.

Walt Disney – Disney

Since his youth, Walt Disney wanted to be a newspaper cartoonist but he found himself constantly rejected with one reporter telling him at the time that he “lacked imagination and had no good ideas”. At the age of 22 Disney decided to start his own cartoon studio but unfortunately a bad business deal made the company bankrupt. This led Disney to a trip to Los Angeles in the hope of becoming an actor, the contents of his suitcase at the time was a shirt, two pairs of underwear and some drawing material. His acting dream never came true, but he instead founded Disney studios with his brother Roy.

During World War II, the United States army took over Disney studios as a repair shop for tanks and artillery. His animators were all sent to war, including Disney himself. Business after the war was slow and the company ended up with a debts of more than $4m. The studio had successfully started distributing cartoons to Europe but they were experiencing problems with raising finance in the US. Disney decided to change director and began producing feature films overseas….which turned out to be a very good decision…

Failing is a part of the game that is life, whether it be in business or in your personal experiences. There is value in failures and most importantly, failures are lessons. What you can draw out of each failure is experience and knowledge that will help you succeed better the next time.

The important thing to note is that if you feel like your business is starting to fail, or has been underperforming for some time, do not stick your head in the sand, take some advice. At Portland we have seen our fair share of failures, but we have also seen some early advice lead to failures being adverted. Whether that be by working in tandem with the company’s accountants to restructure the business or assisting with additional lending for the company to overcome a short term financial hurdle.