In praise of Croydon’s failing businesses

By - Tuesday 21st October, 2014

Jonny Rose, often found singing the praises of #Croydon #TechCity’s successes, finds the virtue in failure

In 2013, 1,924 new business were established in Croydon (source: DuPort 2013 Annual Business Confidence Report).

Undoubtedly, as I explored earlier this year, business confidence is returning to Croydon.

Yet, alongside these encouraging signs there is another story: the tale of the 1,301 businesses that closed that same year. And the 1,012 that closed in 2012. And the 1,153 in the year before that.

No matter how you rationalise the reasons for these business going under – lack of access to credit, talent deficit, decreasing demand for product, etc. – ultimately, those businesses failed.

The very British stigma of failure

The United States enjoys a longstanding belief that failure is merely a pit stop on the way to success. Thomas Edison conducted more than 10,000 failed experiments before turning on the first incandescent light bulb. Milton Hershey faced three unsuccessful starts before satisfying the American sweet tooth. Even Steve Jobs confronted failure when Apple fired him from the company he created – only to welcome him back to transform the marketplace once again, this time with the iPod and iPhone.

Unfortunately, similar stories are far too infrequent in other parts of the world. Failure – and the economic growth that its lessons stimulate – is not an option in every culture.

If Croydon is to encourage a greater number of startups we must give entrepreneurs who have failed more support and a better chance to make a fresh start.

Earlier this year, I saw former-Dragon’s Den ‘dragon’ Theo Paphitis opine that 50% of all startups in the UK fail within the first couple of years. With typical toothy panache, he called this a “damning statistic” and “unacceptably high”. Paphitis displayed a very British approach to the concept of failed startups: condemning it and looking for ways to avoid it in the first place (in this case via education), demonstrating a classic example of a ‘glass half empty’ approach.

Britain is sorely lacking the Silicon Valley mindset that local programmer and Croydon Tech City ambassador Andrew Easter wrote about when he spent time there last Autumn: where failed business are the subject of celebratory parties (with sponsors!), conferences and are seen by venture capitalists as a positive signal for ‘next venture’ investment.

Most startups will end in failure

Startups are the lifeblood of any modern economy, and it is the spirit of entrepreneurialism that spurs bright young (and old!) minds – the Mark Zuckerbergs of the world – to turn a great idea into an even better business. To that effect, entrepreneurs should be provided with access to the finance, expertise and backing that will provide them with the best opportunity of seeing their ideas realised.

But the reality is that startups often go nowhere. According to research by the Harvard Business School, three out of four new businesses fail.

So how, then, should we react to this grim reality?

Why failure should be celebrated

No one likes to admit that they’ve failed. In business and in life people are rewarded and praised for success. That ends up creating a culture where we don’t learn from failure, and could end up repeating mistakes.

Instead, business failure should be celebrated:

Destigmatising failure creates transparency. The best ‘use’ of failure that I have heard of is the Australian airline Qantas – which reportedly rewards pilots who report their errors. They know that if it can happen to one pilot it can happen to others. Usually the pilot has made a mistake, and most people would want to hide such mistakes, but Qantas takes the view that if one pilot can make that error after all of their training, so can others, and they want to plug that hole before it is serious.

The worst corporate cultures – those that punish failure the most severely – are plagued by inaction.

Failure is a necessary ingredient for success and innovation, whether it’s inventing the lightbulb or learning how to ride a bike, yet many cultures spend their time punishing failure so ruthlessly that risk taking and innovation are quickly strangled.

Often a setback or failure can be a positive catalyst that forces founders to take a step back and assess the situation from a more objective angle. Reacting positively to both small and large failures will help to grow and develop a company, and likewise help grow and develop business owners!

Cultures that do not accept (celebrate) failure risk missing out on significant benefits to both grow their economies and improve the livelihoods of their citizens. Their “failure is not an option” mindset stands in distinct contrast to that of those providing risk capital who have reaped big rewards from putting their fears aside.

Presiding over a failing business in Croydon is a horrible experience. It’s not made any easier when local media and individuals crow unsympathetically from the sidelines.

Let’s not forget: businesses that failed always started out trying to add value, generate opportunity, hire employees, build communities, develop talent, create wealth, and start something bigger than themselves. That alone makes them winners in my book.

That Croydon has so many failing businesses is not a problem. The tragedy is if we make Croydon a place where they feel they cannot dust themselves off and start up again.

The next Croydon Tech City event takes place on Thursday 23rd October at 7:30pm at Matthews Yard. The event will focus on tech startups innovating in the property rental and investment sector.

To attend please sign up here OR .

Jonny Rose

Jonny Rose

Jonny Rose is a committed Christian who has lived in the Croydon area for nearly twenty years. He is an active participant in his local community, serving at Grace Vineyard Church and organising Purley Breakfast Club, and was ranked "Croydon's 37th most powerful person" by the Croydon Advertiser (much to his amusement). He owns a lead generation company. He is the Head of Content at marketing technology company Idio, the founder of the Croydon Tech City movement, a LinkedIn coach, and creator of Croydon's first fashion label, Croydon Vs The World. Working on Instagram training and a Linkedin lead generation service. Views are his own, but it would be best for all concerned if you shared them. Please send your fanmail to: jonnyrose1 (at) gmail (dot) com

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  • lizsheppardjourno

    Hi Jonny, I am myself one of Croydon’s failed-start-ups – a bleeding and bandaged casualty of entrepreneurial culture – and I can’t express strongly enough my agreement with everything you say here. To respond positively to failure re-casts it as an ongoing process of endeavour, and there’s few lessons like a business failure to sear the knowledge you previously lacked into you. My Crash of 2008 turned out to be a hugely valuable, if somewhat vertiginous, learning curve.

    ‘Often a setback or failure can be a positive catalyst that forces founders to take a step back and assess the situation from a more objective angle’. WORD.

    • Jonny Rose

      Thank you, Liz – glad it resonated! :)