Warwick Business School offers ‘failure therapy’ service

ENTREPRENEURS who saw their business fail in 2012 are being offered ‘failure therapy’ from Warwick Business School.

According to the Insolvency Service there were 3,971 compulsory liquidations and creditors’ voluntary liquidations in England and Wales in the third quarter of 2012. On top of that they recorded 28,062 individual insolvencies.

But the end of a business does not have to be the end of an entrepreneur according to Professors Deniz Ucbasaran, Andy Lockett and John Lyon at Warwick Business School and Dean Shepherd, of Indiana University.

The team have pooled together more than 40 papers of research on the effects of business failure and believe their experience can offer entrepreneurs ‘failure therapy’ to start again in 2013.

In their paper Life After Business Failure: The Process and Consequences of Business Failure for Entrepreneurs, they reveal how entrepreneurs can recover from the trauma of losing a business and with the country desperate to pull itself out of the on-going economic crisis how the UKs innovators and business drivers react to failure will be crucial.

Professor Ucbasaran, professor of entrepreneurship at the business school, said “Where there is uncertainty, there is bound to be failure. It is not surprising, therefore, that many new ventures fail. The aftermath of failure is often fraught with psychological, social and financial turmoil.

“But it doesn’t have to be the end. Successful entrepreneurs pick themselves up after failures, and even capitalise on them. They see failure as an opportunity for learning.

According to Professor Lockett, who is professor of strategy and entrepreneurship at WBS, “there can be a stigma to an entrepreneur involved in a failing business”.

He added: “Research shows that accepting at least partial responsibility may allow them to garner sympathy and signal they have learned from their mistakes.

“Importantly we found that some investors treat failure with a degree of tolerance, acceptance and open-mindedness. As long as the entrepreneurs can address their failure by diagnosing what went wrong and deal with the fall out in an honourable and professional manner, then any subsequent attempt at raising finance may be enhanced. Failure may be a real opportunity for the entrepreneur to demonstrate their true resolve.”