Failure not always a stepping stone to success

IN RECENT discussions about Singapore’s increasing corporate bankruptcies, some experts have argued that there is no cause for alarm. The logic is that as more people start businesses, a higher failure rate is natural. Bankruptcy, they say, is less of a stigma today and simply part of a dynamic economy where risk-taking is encouraged.

At first glance, this argument seems reasonable. After all, some of the world’s most successful entrepreneurs – Steve Jobs, JK Rowling, and Jeff Bezos – all faced setbacks before eventually finding success. However, not every entrepreneur gets a second chance, and not every business failure produces valuable lessons.

The idea that failure is always a learning experience ignores the harsh reality for many business owners who struggle to recover.

Singapore has seen a sharp rise in business closures. In 2024, the number of compulsory wind-ups surged by more than 50 per cent, and bankruptcy applications reached 4,521 in the first 11 months alone.

While risk-taking is an essential part of entrepreneurship, the assumption that all business failures are simply part of a healthy economy overlooks the personal, financial, and structural consequences of failure.

Not every setback is a set-up for a comeback

Failure in business is often romanticised as a stepping stone to success. We hear stories of those who lost everything, only to rise again and build empires. But what we do not hear as often are the stories of those who never recovered –those who, after their businesses collapsed, were left with debt, emotional strain, and few opportunities to start over.

For many entrepreneurs, bankruptcy is not just a temporary financial setback – it is a life-changing event. Unlike venture-backed startups where investors absorb the losses, many small business owners fund their ventures with personal savings, loans, or even their homes as collateral.

When the business fails, they are left to bear the full financial weight of that failure. In Singapore, where bankruptcy laws are strict and the cost of living is high, the margin for error is slim.

Some former business owners, unable to rebuild, return to traditional employment after years of pursuing their entrepreneurial dreams. A Rice Media article highlighted Singaporean entrepreneurs who, after experiencing failure, re-entered the 9-to-5 workforce. Not because they lacked ambition or resilience, but because the practical realities of failure left them with no other choice.

The illusion of risk-taking : Are all failures equal?

The notion that more business failures signal a thriving entrepreneurial culture might be valid at the national level – it’s just the law of averages. But for the individuals who staked all and lost, it is meaningless. That notion assumes that all risks are calculated and productive. But not all risks are the same, and not all failures carry valuable lessons.

Some businesses fail because of market conditions beyond their control, while others collapse due to a lack of planning, poor financial management, or unsustainable business models.

Take the wave of pandemic-era businesses that thrived under unique conditions – remote work, e-commerce, and digital events. As life normalised, many of these businesses struggled to adapt. They were not inherently flawed, but their success was built on temporary market shifts rather than long-term viability.

Their closures were not a reflection of poor execution or a lack of innovation, but rather a sign of how external factors can dictate success or failure.

Likewise, rising operational costs and economic pressures have pushed many traditional businesses – particularly in retail, F&B, and hospitality – into unsustainable positions. Many small and medium enterprises do not have the financial runway to survive prolonged downturns. Their failure is not an entrepreneurial misstep, but a consequence of structural challenges that even the best strategy cannot always overcome.

Calculated risk-taking vs recklessness: The fine line between boldness and blind audacity

It is often said that regret is worse than not trying at all. The idea that one should take risks, regardless of the outcome, is deeply embedded in entrepreneurial culture. However, taking a risk is not the same as taking a reckless gamble.

A truly successful entrepreneur is not just someone who dares to try, but someone who understands when, how, and what risks are worth taking.

The difference between those who bounce back from failure and those who do not often comes down to preparation and adaptability. Some entrepreneurs take calculated risks – they research, plan, and have contingency strategies in place.

Others dive in blindly, believing passion and hard work alone will guarantee success. Unfortunately, the latter approach rarely ends well.

The problem with glorifying failure is that it encourages risk-taking without responsibility. Entrepreneurship is about building something sustainable, not just taking big chances and hoping for the best. Rather than focusing on how many times someone has failed, we should be asking: Did they understand the risks before they started? Did they have the financial resilience to survive setbacks? Did they have a plan for adaptation if the market changed?

A strong entrepreneurial culture should encourage boldness but also reward foresight. Failure should not be feared, but neither should it be treated as a badge of honour without considering its consequences.

A smarter approach to entrepreneurship

Instead of simply accepting higher business failure rates as a sign of healthy risk-taking, we should focus on creating a system that enables entrepreneurs to succeed in the first place. This means providing access to better financial knowledge, so business owners understand cash flow, investment risks, and sustainability before they launch. It also means providing avenues to develop business acumen and mental resilience.

The goal should not be to discourage risk-taking but to ensure that entrepreneurs are better equipped to take risks that are worth taking. A thriving business ecosystem is not one where people start businesses simply because they can – it is one where they start businesses with the tools, knowledge, and support to make them last.

Singapore’s rising bankruptcy numbers should not be dismissed as merely a sign of economic dynamism. Instead, they should push us to ask: How can we create an environment where businesses do not just start, but survive? Success is not just about trying – it is about trying wisely, failing smartly, and learning effectively.

The writer is Asian regional managing partner of the Haines Centre for Strategic Management