How Bonsai Businesses Fail

The other day in my mastermind group, I was discussing the failure of a business. Not my business, but an acquaintance’s.

I had seen it happening, and I thought it offered interesting opportunities for deconstruction — it failed not because the idea wasn’t sound or the founder wasn’t capable.  Due to a couple of large constraints, it couldn’t scale large enough to support the founder in the runway she had available, and when time ran out, she had to move on to other things.

The reason I was discussing it with my mastermind was to seek guidance in how to sensitively approach the topic of this dead business and ask her to share some lessons.

If it had been my business, I would’ve felt no compunction about saying: here’s what happened. Here’s why it failed. Here’s a circumstance where it might’ve succeeded, but here’s why I ultimately decided not to take that path. I can tell you that about all of my failed businesses, and it’s good information, both to have and to share. And as an illustrative case study this business had several excellent features.

I made my case to my mastermind partners, and included how I would instinctively go about asking… and also why I thought that would probably not be well received. Finally, Erika, a wise and sensitive soul, said, “maybe you shouldn’t refer to it as failure.”

If you can imagine me speechless here, please do so. I wasn’t speechless for long, but it’s difficult for me to recall another when an idea caught me so off guard.

I know I usually come to YOU with thoughts and ideas fully formed, but this time I’m asking:

Is it hopeful, or at least emotionally tender, to refer to a business that didn’t work out for you as a failure?

Linguist John McWhorter has an op-ed in the Wall Street Journal arguing that Shakespeare’s plays should be re-written because of the drift in the meanings of words. The problem isn’t that Shakespeare is hard to understand, it’s that we think we know what he was saying when we don’t.

For instance, when X character describes himself as generous, we think he means he’s generous! That is, he gives freely of his time and resources. But in fact when the line was written, it had a meaning closer to our modern understanding of the word ‘noble,’ and so McWhorter argues that if we want to catch the inferences Shakespeare is making, the line should be rewritten to say ‘noble.’

Similarly, if my use of the word failure seems to imply some moral judgment and put people on the defensive, I want to change my language to make sure my audience hears what I intend. But at the same time, I don’t want to get into those self-help-y parlour tricks where we move the goalposts until the word failure is essentially meaningless.

Let me give you an example to show you how morally neutral my use of the word is.

When a farmer plant the crop, he does it in the expectation of a certain return. Sometimes his crop is already sold at an agreed-upon price, and sometimes not, but either way, he is a pretty good idea of what his yield will be and what he’ll get come harvest. Because the investment in seed and chemical is so high, he takes out crop insurance so that if, for whatever reason (and there are many) things go south, he at least recoups his capital.

[Tweet “When crops fail to sprout, nobody says to the farmer, “You should have worked harder””]

So say there are unusually heavy rains right after seeding that wash the seed away. When the crop fails to sprout, the farmer calls his insurance, which sends out an adjuster, and the adjuster decides, based on how many seeds managed to sprout, that the crop was a “60% loss,” “80% loss,” “total loss,” or whatever. The farmer gets his money. Maybe he tries to reseed, or maybe he lets the spindly survivors grow.

But nobody says to the farmer, “Why did you plant on this day?” (Although the farmer probably says it to himself.) No one says, “You should have worked harder,” because that would be ridiculous. Crop failure is just something that happens once in a while. If anything, his neighbours would congratulate him on the foresight or prudence to take out crop insurance, because not everybody does.

And there can be instances of failure, that have nothing to do with the weather. If you plant half your farm to barley and then the bottom drops out of the barley market, then you’re going to grind your teeth and wish to hell you planted peas instead. Because you’re not going to get the ROI you anticipated, and that’s going to mean difficulties for your future cash flow, and for the next crop you need to buy seed for. But again, it’s no moral judgment on the farmer.

Believe it or not, bonsai businesses fail in the same way.

And the main way they fail is that they couldn’t be what their owners needed them to be, and so the owners had to move on to something else. (Conversely, the best way to succeed with a business, is to create an environment where it is allowed to grow with no pressure as a side business until it is big enough to stand on its own.)

When you think about it, businesses fail in the same way that most relationships fail — not because the people in the relationship are bad or broken, but because they couldn’t be with the other needed them to be.

If your business fails, there’s no reason to see it as moral failure, or as personal failure. It just failed, just like crops fail. What matters is that you try again next year.