It’s a commonly held belief that in order to succeed, you need to hit rock bottom first. But to what extent is this because of inspirational movies? ‘Rock bottom’ is usually depicted as the main character doing a lot of head shaking accompanied by morose music, but the reality can take a number of different forms.
Whether a company's funding has run out, or there’s been an eviction, rock bottom doesn’t have to be as all-encompassing bad the movies suggest to motivate. Yet, many entrepreneurs cite moments they’ve failed terribly as great inspiration for turnaround. Even Sir Richard Branson [below] experienced serious difficulties as a budding entrepreneur when he failed to convince a major publishing house to buy out Student Magazine. Failure can be a great turning point.
Firstly, how do you know if you’ve reached rock bottom? Entrepreneurs have described it as a feeling of 'hopelessness' and an inability to see the wood for the trees. There are also tough decisions to be made - is it better to give up or keep pushing?
For serial entrepreneur Professor Vikas Shah, he knew things were bad after the first .com crash. "Clients were going bust or pulling contracts from all sides, it was absolute carnage. I lost a good friend and mentor to a stress-induced heart attack, and my own mental health was suffering to the point where I even tried to take my own life. The 'cult of the alpha male' was ever-pervasive in entrepreneurship at the time, and people simply didn’t talk about their challenges, problems and feelings. When I realised that my emotional well-being had spiralled out of control, I realised this was absolute rock-bottom."
The financial crash of 2008 also affected Steve Gaskin, managing director of Right Angle Limited. After the crash, Gaskin says he was in danger of going bust. "We took a dose of Winston Churchill’s 'Never give up' and contacted our existing clients for repeat business, formulated a recovery plan, and contacted our competitors offering our services."
Businesses are never risk-free. It might make more sense to simply fold a business than suffer more hits. If you’re not getting repeat customers then this is good reason to give up - it means you’re unlikely to be better off this time next year. The reason to move on is often two-fold - entrepreneurs rarely have lots of extra capital to keep funding an idea through a bumpy patch. Spending all your money before a business really takes off means there’s no safety pot to dip into.
For Charlie Mullins [above], founder of Pimlico Plumbers, his crunch point came when he took on large premises in the early 90s. Again, the recession lead to his 'breaking point' even though business was 'very good'. "I was told by one advisor that for three grand, I could go bankrupt and then start trading under a different name the very next day. This seemed like a quick-fix, but in reality, when I looked closely at the deal, I realised I’d have lost my house! I responded by surrounding myself with people who were actually good at their jobs rather than those I liked, creating a proper business plan and stopping doing work on credit."
So how to 'bounce back' and figure out what you need? Vikas Shah says resilience is most important. "The most important life-skill for entrepreneurs is resilience. I’ve seen too many great people who have suffered significantly in terms of their quality of life because they didn’t have the emotional, psychological and stress-resilience you need to be an entrepreneur. This isn’t something you 'have or don’t have'. You can learn it, and you can practice it, and you can become resilient."
Learning good business lessons is a positive outcome of hitting rock bottom. Building on errors that lead you to that position in the first place is worthwhile. Even if it feels like the thing causing the problem is out of your control, like a financial recession, building up savings, or having a strong network of contacts, can make or break a business if it hits rock bottom.