Embracing Failure: Essential Lessons for Every Entrepreneur
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In 1989, I opened an Italian restaurant in Tsim Sha Tsui, Hong Kong, where the waiters sang opera arias between courses. It was a lot of fun, but it was not a good business, and it closed in 1993.
I had assumed running a restaurant was easy. It isn’t. The location was wrong, the costs were too high, and I didn’t know the trade well enough to see either problem early. Around the same time, I put money into film production and property. Both businesses struggled and were sold in the mid-1990s.
I share this because founders tend to talk about their successes and quietly bury the rest. Yet failure is a normal part of business. According to the U.S. Bureau of Labor Statistics, only about half of new U.S. business establishments are still operating five years later. Hong Kong is no different. In 2025, a record number of companies registered in the city, but the South China Morning Post reported that more than 99,000 were dissolved in the same year.
1. Respect What You Don’t Know
Most of my early setbacks came from businesses I entered because they looked exciting, not because I understood them. This common pattern is reflected in CB Insights’ 2026 analysis of startup shutdowns, which found that 43% cited poor product-market fit as a reason for failure. Many founders are highly capable but misread markets they don’t know well.
My rule since then has been simple: never start a business you don’t know. If you want to enter an unfamiliar field, partner with someone who has spent years in it, and listen carefully.
2. Know When to Let Go
The hardest decision in a struggling business is often to stop. While CB Insights found that 70% of failed startups ultimately ran out of capital, running out of money is usually a symptom rather than the root cause. Months or years may be lost before the financial strain forces closure.
According to a report by Crowdfund Insider, nearly a quarter of failed startups operated as “walking dead” for three years or more after their last funding round, no longer growing but still running. Holding on often increases eventual losses.
Closing the film and property businesses was difficult but freed up resources for better opportunities. It’s important to recognize that closing a venture is not the same as failing as a person.
3. Give Yourself Time to Recover
Losing a business can feel like a bereavement. Research by Professor Dean Shepherd, published in the Academy of Management Review, suggests founders recover faster when they oscillate between confronting their loss and stepping away from it, instead of dwelling or denying.
The emotional toll is significant. A study of 242 entrepreneurs led by Dr. Michael Freeman at the University of California, San Francisco, found that 72% experienced mental health conditions, either directly or through family. Talking to trusted people, maintaining proper sleep, and exercising are crucial to clear thinking and sound decision-making.
Personally, I learned to prioritize health early after losing my father at 49. This habit has helped me stay grounded during tough business times.
4. Study the Failure on Purpose
Experience alone does not guarantee better outcomes. Research from Harvard by Paul Gompers and colleagues shows that entrepreneurs whose previous ventures failed had only a 20% chance of success next time—just slightly above the 18% for first-time founders—while those with prior success had a 30% chance.
Understanding the type of failure is also key. In her book Right Kind of Wrong, Harvard Business School professor Amy Edmondson distinguishes between basic failures—caused by avoidable mistakes—and “intelligent failures,” which occur when testing sensible ideas in new territory with limited downside. The former should be avoided; the latter are part of progress.
After setbacks, I now document assumptions, outcomes, and lessons learned, then seek external critique. Early failures can feel like personal judgments, but with practice, they become valuable information.
5. Try Again, and Don’t Wait Too Long
A 2019 Nature study by Yian Yin, Dashun Wang, and colleagues analyzed over 58,000 venture-backed startups and found that successful entrepreneurs didn’t fail less often—they simply moved faster between attempts. Each new try built on previous lessons, shortening the gap between learning and action. Speed here means agility, not recklessness.
This requires courage. The Global Entrepreneurship Monitor’s 2025/2026 report revealed that fear of failure deters two in five adults from starting a business. Yet those who have exited a business are more likely to start again.
As I have told interviewers, these failures have shaped who I am. If you are recovering from one now, be patient with yourself, honestly assess what went wrong, and when ready, take the leap again.
Key Takeaways
- Respect what you don’t know — if you want to enter an unfamiliar field, partner with someone who has spent years in it, and listen to them.
- Know when to let go, and understand that closing a venture is not the same as failing as a person. Give yourself time to recover, and study the failure on purpose.
- Try again, and don’t wait too long. Speed here does not mean recklessness. It means shortening the gap between learning a lesson and acting on it.
For more insights, read the original article here.
