The Upside of Failure | BTalk Australia

(17min 15) When your business fails the tendency is to blame yourself. It can be an incredibly lonely time. Yet many of the world’s most successful business people have re-emerged from failure.

With a few failures behind him Mark Kenway offers advice for anyone experiencing a business collapse in his new book “Rebound – Life After Liquidation”. He shares some of his experiences with Phil Dobbie in this episode of BTalk Australia.

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• Today’s Transcript

Phil Dobbie: Hello I’m Phil Dobbie and welcome to BTalk Australia. Today we look at failure from a man who has been there and done that.

Many of the world’s most successful business people have said that you can’t have success without having experienced failure. And Mark Kenway has decided to put his experience of failure down in writing for a book called Rebound - Life After Liquidation. Now Mark, failure does have a bit of a stigma attached to it, doesn’t it? Do you think that’s part of the problem?

Mark Kenway: Absolutely, it’s part of the problem. If more of us talked about our failures in business and in life there’d probably be fewer people experiencing it because it’s one of the things we need to pass on, those things that we learn, whether it’s good or bad. One of the books that really helped me a lot was a book by Stephen Lundin, a guy who did the Fish story and he did a book called Cats: The Nine Lives of Innovation. And he talked a lot about failure. One of the things he says is that we should learn to fail early and fail well, and that failure creates a platform for future success or at least understanding failure creates a platform for future success.

Dobbie: Fail early and fail well, but don’t fail often I guess is the message.

Kenway: Yes exactly.

Dobbie: How many business failures have you had, is it just the one?

Kenway: No, it’s three. In 1984 I was working in a family business. We had an electrical retail business. It was a reasonable size business. We had 10 stores and about 70 staff. It was just after the recession in 1983 and we thought we were recovering from it, but our lenders didn’t think so and put us into receivership. That was a really horrendous experience. We were in liquidation and receivership for a period of about six months. And about a year or less than a year after the company was wound up, my father and I started another business but this time in lighting retail. We had no capital to start with so it was a very long, slow road back. By about the late 90’s we weren’t probably as successful as we had been previously, but we had three stores and it was running quite well. Then in 2003 my father passed away leaving me to run the business and unfortunately three years after that the ship went down with me standing at the helm. So that was the second failure.

Dobbie: And number three?

Kenway: Number three I’d actually bought into a franchise business, which is a software marketing business. Mainly it was a start-up business. And when our family business collapsed in 2006 I thought, well I’ll just put all my energies into the franchise business that I had sort of sitting off to the side. But the problem was that I was really a spent force. I knew how to turn the engine on but there was no petrol in the tank anymore and I literally had to walk away from that franchise business. I just physically and emotionally wasn’t able to continue on. So I literally walked away from business and that was about a year and a half ago.

Dobbie: They seem like different circumstances, but do you see anything common between those three businesses?

Kenway: Not really. One of the things you hear people say is, when they’re talking about the causes of business failure, the most common thing is bad management. When I look back over the failure of those three businesses or situations the reasons were vastly different in each case. In my book I list out the nine contributing factors to the failure of the business and I was managing eight of the nine factors, but it was the ninth factor that I underestimated and I obviously wasn’t managing well enough. So would you say the bad management, probably inadequate management, but when you talk to insolvency practitioners who are constantly dealing with business failure, the most cited reason they give is bad management. But I think it’s an overly simplistic answer.

Dobbie: Yes and if you take that as the answer then you’re going to take that personally, aren’t you? And a good question is would anyone else have done anything different in those circumstances?

Kenway: That’s right. We have the wisdom of hindsight. You can look back and go ah, if I had my time over again I would have done this differently. When I look back at the business that failed in 2006, the ninth problem, the problem that actually put us under, was actually unsolvable. There was no answer to it. And really I should have walked away from the business long ago. And probably that’s one of the things that I encourage other business people to do is to consider exiting as an option. We all want to do our utmost to turn a business around or to save it and so we should. But we do need to consider exit strategies. If I had exited out earlier on, it would have been a lot less messy.

Dobbie: Well it’s true isn’t it? We do see businesses, even sizeable businesses, throwing good money after bad. Sometimes I think you’re right, you’ve just got to say this is a lost cause, onto the next thing.

Kenway: Yes and that’s what we should do, but the reason we don’t is usually because of the level of emotional investment we have in the business. Businesses, particularly small to medium size enterprises and often family businesses, are a lot more than just about making money. Certainly for me, when I look back, my identity was tied up in the business. My ego was in the business. If the business failed then I was a failure. And so that’s a very scary outcome. But I can look back now and just see how much my heart was invested in the business and that’s why I wasn’t able to really look objectively at it and be able to walk away when I should have. I had a friend of mine who was a client as well who had advised me sometime, actually probably back in 2004, he said Mark you need to walk away from this business. I just said, you’ve got to be crazy. I’ve invested 20 years of my life in this and how can I walk away from it now? But he was right. And yet even knowing what I know now, I still don’t think I would have walked away from it. That’s how powerful I think our identity and our emotional investment in businesses are.

Dobbie: So that makes it particularly hard, doesn’t it, when it does fail and you’re forced to walk away from it. What happens emotionally to you over that period and how’d you get out of it?

Kenway: It’s devastating and that’s why I wrote the book, New Life After Liquidation, because you feel hollow, you feel like an utter failure, not only as a business person but also as a provider for your family. You feel embarrassed to show your face in business circles. I remember the first time I had to go to a business breakfast shortly after the business had been wound up in 2006 and I remember feeling incredibly ashamed. So then I went to the breakfast because I was forcing myself to confront those fears.

Dobbie: It wasn’t out of hunger?

Kenway: No it wasn’t. And the thing is since that time I’ve met plenty of other business people that have also been through failed businesses. People who even are successful now in business, but one of the problems is they don’t talk about it. One of the things that I would say is, boy I wished I’d met you before I’d lost my business. But we don’t talk about these things. So one of the things I’ve done in this book is not just use my story, but I’ve collected lots of other business people’s stories, I’ve changed their identities to protect them, but I’ve used other people’s stories to illustrate principles in the book. And I think if more business people were willing to share their stories of failure we’d see a lot less failure going on.

Dobbie: You point to people that you do name who are very successful business people. People like John Symond from Aussie Home Loans, even Winston Churchill. I love the Winston Churchill quote you’ve got which is “Success is going from failure to failure with great enthusiasm”.

Kenway: I love your accent. You’ve pulled a Winston Churchill off beautifully.

Dobbie: Well the pommy accent helps a little bit. A lot of very successful business people have got this history, but it’s always hidden. And I think Aussie John is a great example, isn’t he?

Kenway: Yes and Aussie John’s book called or self-titled Aussie John is a read that I would highly recommend to anybody in business. John Symond himself did it very tough in the process of trying to resurrect a new business out of his failed business. He did it at great personal cost. I think that’s one of the things that you have really got to consider is what will it cost you in terms of relationships? What will it cost you in terms of physical and mental health? And at the end of the day, the decision I made was that my health was more important than any business. I mean Aussie John sowed his life into an outstanding new business and he’s reaped the fruits of that, but he also lost a marriage and had strained relationships for a long time.

Dobbie: Yes, do you think anybody can rebound from failure? It does take an enormous amount of tenacity doesn’t it and as you say, a lot of sacrifice as well.

Kenway: It does and probably the difference maker that I think is the amount of relationship support you have. One of the things that I found after losing my business was how few friends that I have. I thought that I had lots of friends and I think a lot of business people think that way. They confuse business associates as friendships. And one of the things that happens when you do lose a business is you find out who your real friends are. The more emotional support you have the better your chances of rebounding, in life and in business. I believe that your ability to rebound in business is contingent upon personal recovery. So you’ve got to be able to get to a place personally where you can deal with the failure and the shame and in some cases people are suffering from depression. And I’ve encountered a scary number of business people who are strong, determined, capable, competent people that are struggling with low self-esteem and depression as a consequence of a business failure. That’s another reason why I wanted to write the book, was to sort of map out a pathway for recovery for people so then personal recovery will form a foundation for a business recovery in the future.

Dobbie: It’s almost like a broken marriage, isn’t it? It is a lot of parallels.

Kenway: Very much, that’s a very strong analogy. In fact that’s one of the casualties of business collapse too; is any relationship or marriage that can survive a business failure will go on pretty much forever. But a really disturbing number of relationships don’t survive a business failure. Often one follows the other and sometimes there’s a bit of a horse and cart situation, but there seems to be this disturbing correlation between the two. That’s where it really gets difficult because it’s one thing to lose a business, but at the same time or shortly afterwards you lose a marriage. That’s when people feel like the wheels are literally falling off their life.

Dobbie: Absolutely. So you’ve made the point here that often when people’s business collapses and they’re at a pretty low ebb they want to bounce back and be seen back in society and back at business circles pretty quickly so they try and establish another business to get the new venture going quickly, which could be exactly the wrong thing to do.

Kenway: Absolutely and I caution people against that because one of the things that you have to go through after you lose a business is a time of grief. When you lose anything in life you will grieve. If you try and re-establish yourself too quickly you find that there’s no foundation there and you could end up going back into business with the same problems that caused the collapse of the first business. So it’s really important to take some time and to really assess what went wrong and what needs to change. So certainly with myself, I’ve done a lot of self-analysis from a personal level and also from a business skills and competency level. I’ve looked back and tried to identify what were my strengths, what were my weaknesses, and I’ve been working on some of those weaknesses. I actually went back to Uni and started doing some post grad business management subjects, particularly in the area of accounting. That was really my weakest area, accounting and the finance side of the business.

Dobbie: That’s one of the points you make in the book, listen to your accountant.

Kenway: Yes, absolutely and particularly in the current economic environment I think small to medium size enterprises should be working hard and building a good relationship with the company accountant. Bigger corporations have their own financial controllers and their own in-house accountants, but a lot of small to medium size enterprises don’t have that luxury so they’re relying on a third-party accountant and I think we tend to treat accountants a bit like dentists, we only go to them when we’re in extreme pain and by then usually something has to be extracted. If we’d gone to them earlier, if we’d had the checkups we might not have had the serious problems that occurred.

Dobbie: And they charge about the same amount as well, don’t they, as dentists? The same amount per hour.

Kenway: But I’ve heard that dentists have a higher suicide rate than accountants so, I don’t know what that means though.

Dobbie: That’s quite encouraging news. You’re on the cover of your book standing on Brisbane Story Bridge. I hope that wasn’t a bad moment for you. You weren’t thinking of jumping off at that point were you?

Kenway: Not at that point. There was one time, a very dark time, when some dark thoughts did pass through my mind. The reason I did the Story Bridge Adventure climb is that in looking at things that needed to change in my life, I was actually afraid, I still am afraid of heights, and I wanted to challenge that fear so I did that and got it photographed. I actually did the climb twice because the first time I was white knuckled holding onto the guardrails. The second time I was exuberant and I got a photograph and I thought, that really says something and that’s why I put that on the book cover.

Dobbie: That’s great. The book is called, Rebound - Life After Liquidation and Mark Kenway, thanks so much for you time today.

Kenway: Thanks very much Phil.