Your company's failure is not your failure: how to separate yourself from the business

Sunday lunch at his parents’. Over the soup, his aunt asks how the company is doing. For a moment he says nothing, then: “I closed it.” Someone puts down a spoon. His mother quickly says it was too much work anyway. His father looks at his plate. Within half a minute the conversation has turned to the weather, and everyone seems relieved. Except him. He barely says a word for the rest of the meal, and in the car he notices that one sentence keeps repeating in his head — not “the company didn’t make it”, but “I didn’t make it”.

This shift, from the company to the self, is small in words and enormous in its consequences. In this post I would like to look at why the failure of a company is so personal for many founders, what goes on inside them when the business ends, how differently cultures view failure — and how to slowly learn to separate the story of the company from the story of yourself, without denying your own responsibility.

Failure is the rule, not the exception

Let’s start with the numbers, because founders whose businesses have failed often don’t know them — or know them only as statistics that apply to other people. The US Bureau of Labor Statistics has tracked for decades how many new businesses survive. The data are remarkably stable: roughly one in five new businesses closes within the first two years, and by the fifth year about half have not survived. In other developed economies the proportions are of a similar order of magnitude.

This does not mean that failure is unimportant or that it doesn’t hurt. It does mean that closing a company is one of the most common outcomes of the entrepreneurial path, not a rare disgrace that befalls only the incompetent. When I first read this in the context of people who feel utterly alone after a failure, it struck me that the figure itself offers a kind of comfort: what hit you is not something that happens to no one. It is something that happens to a great many people, who simply keep quiet about it.

The silence is an important part of the story. Successes are talked about at conferences, in interviews and on social media. Failures, almost nowhere. So everyone who fails has the impression of being the exception — and that impression is one of the most powerful fuels of shame.

When the company becomes part of you

Founders often experience their companies not as something they have, but as something they are. The researcher Melissa Cardon and her colleagues described entrepreneurial passion as a feeling closely tied to identity: entrepreneurs are passionate about what, for them, is part of who they are. That is why founders talk about their company as if it were a child, why they lose sleep over it and why they are willing to sacrifice so much for it.

This entanglement is part of what drives founders. But it comes at a price. When the company is part of your identity, its collapse is not just a business event but an attack on your picture of yourself. The question “what went wrong with the company?” quietly turns into “what is wrong with me?”.

In relational family therapy, the approach I am training in, we often look deeper here too: who was the company meant to prove your worth to? To parents who didn’t believe in you? To yourself, having grown up feeling you were enough only when you achieved something? When a company carries that task as well, its collapse opens not only questions about money but an old wound.

Shame after bankruptcy

In their research, June Tangney and Ronda Dearing described the difference between guilt and shame with great precision. Guilt says: I did something bad. Shame says: I am bad. Guilt is directed at an action and often prompts a person to repair the damage. Shame is directed at the whole person and often drives them to hide, withdraw or lash out. I wrote more about this difference in the post Guilt and shame are not the same — and the difference matters.

After a company closes, both emotions often appear at once. Guilt may be justified — perhaps you really did make a decision that turned out to be wrong, or put something off for too long. Guilt is something you can work with: you acknowledge what was yours, repair what you can and learn from it. Shame, however, has no address. It doesn’t tell you what you should have done differently; it only tells you that you, as you are, are wrong. And because it is so painful, people hide it — even from those closest to them.

That is why founders often don’t tell anyone what happened after a failure. They avoid get-togethers, don’t reply to messages from former colleagues, fall silent on social media. Shame feeds on secrecy. When you talk about it with someone who doesn’t judge you, it loses some of its power. For more on how shame works from the inside, see the post Shame: the emotion that whispers “There is something wrong with me” and the short explanation of shame.

Grieving for a company

In 2003, the researcher Dean Shepherd proposed that we understand the end of a company as a loss that needs to be grieved — much like other major losses. That may sound exaggerated. But a founder loses more than income. They lose a routine, a team they spent more time with than with their family, a role in which others recognised them, and the future they had imagined. That is a great many losses at once.

Shepherd drew on a model of grief which holds that, after a loss, a person moves healthily between two orientations: dealing with the loss (remembering, feeling, crying) and building forward (sorting out practical matters, taking on something new). Whoever stays only with the loss gets stuck. Whoever jumps straight into a new company without looking at the loss often carries it into the next project. His proposal was that founders learn most from a failure precisely when they allow themselves to oscillate between the two.

A later study by Stephanie Jenkins and colleagues showed that grief after a business failure is linked not only to the money lost but also to how far the person experienced the failure as a blow to their self-worth. In other words: the more the company is part of who you are, the more it hurts. Grieving a company is often also grief nobody acknowledges — those around you expect you to “pick yourself up and move on”, because “it was only a business”.

The culture you fall in

How painful failure feels depends not only on you, but also on how your environment views it. Melissa Cardon, Christopher Stevens and Ryan Potter analysed how newspapers in different American regions reported on business failures. They found that communities interpret failure in two ways: as misfortune, caused by circumstances, or as a mistake, caused by the entrepreneur. Which view prevails differs from place to place — and affects how easily someone can start again after a failure.

It is often said that in some environments, such as parts of the American tech scene, failure is almost a line on your CV, while in Europe it carries more stigma. This difference is probably oversimplified, but there is some truth in it. In Slovenia, where people often all know each other and where the phrase “what will people say” is not just a joke, a failure can be very public. The neighbours hear about it, the relatives, former classmates. And because there is still a living memory of companies that collapsed and left workers unpaid, the word bankruptcy brings to many minds an image of dishonesty rather than courage.

When I talk with people about this, I notice it helps to separate two things: what your environment thinks about the failure, and what you think about it. Over the first you have little influence. Over the second you have more than it seems — although it often turns out that the harshest judge is the voice you carry inside, not the aunt at the table. I wrote about that voice in the post The inner critic: where the voice that constantly judges you comes from.

One basket or several

In the 1980s, the psychologist Patricia Linville put forward an idea she called self-complexity. In her studies, people who experienced themselves through several different roles and domains — partner, father, friend, runner, professional, volunteer — showed smaller swings in mood after stressful events. When one domain is shaken, the others remain and hold the person up. For those whose whole self-image rests on a single pillar, a blow to that pillar shakes everything.

Later research has not always confirmed this finding unequivocally, so I wouldn’t treat it as a law. But as a picture it is useful, especially for founders. The years of building a company are often years in which every other basket was left empty: friendships faded, hobbies disappeared, the family got the leftovers. When the company falls, there is nothing left to catch the person.

That is why separating yourself from the business is not just a mental exercise. It is also something very practical: gradually returning to the parts of life that were neglected during the years of building. A phone call to a friend you haven’t seen in three years. The Monday training sessions you once loved. An evening with the children that is not a “substitute for work” but part of who you are.

What you tell people

One of the hardest questions after a failure is surprisingly ordinary: what do you say when someone asks what you’re doing now? Founders who for years answered with the name of their company suddenly have no sentence. Some therefore avoid company; others embellish the story; still others tell it so harshly against themselves that the listener doesn’t know where to look.

(a composite, not a real person)
“When someone asks me what I do, I don’t know what to say. That I went bust?”
“What would you say if this had happened to your best friend?”
“That he spent four years building a company that didn’t survive. That he learned a lot. And that he’s now thinking about what comes next.”
“And what’s different when you say that about yourself?”
“…That I don’t believe me.”

That “I don’t believe me” matters. It doesn’t mean the kinder story is a lie. It means shame is still louder than the facts. You don’t need to feel the kinder sentence as true straight away. It is enough to start using it — the feeling often follows the words rather than preceding them. What Kristin Neff’s research says about self-compassion can help here: treating yourself the way you would treat a friend in the same situation. More in the post Self-compassion instead of self-criticism: what Kristin Neff’s research shows.

Exercise: three stories about the same failure

This exercise helps you separate what was within your control, what wasn’t, and what the failure says about you — or doesn’t. You need paper, a pen and half an hour of quiet.

1. Write the story of the failure as you carry it now. Without censoring, including all the harsh words you use about yourself. At the end, underline every sentence that begins with “I am”.
2. Divide a sheet into three columns. First: my decisions. Second: circumstances I had no influence over (the market, timing, people, money). Third: chance. Put each event from the story into one of the columns. If it belongs in more than one, split it.
3. For each decision in the first column, note what you knew at the time. Not what you know today. In hindsight everything is obvious; at the time it wasn’t.
4. Write a second story — as you would write it to a friend. The same events, the same first column, no embellishment. Just without the “I am” sentences that are verdicts, and with responsibility where it truly is yours.
5. Add a third part: who you are besides the company. List at least five things that you are, that you love or that you can do, which have nothing to do with business. For each, think about when you last gave it room.

You don’t have to do the exercise in a single day. Many people find it helps to return to the second story after a week or two and read it aloud — to themselves or to someone they trust. If the “I am” sentences won’t leave you alone, the exercise Two columns for the inner critic can help too.

When you really learn from failure

In the business world there is a popular saying that failure is the best teacher. Research is more cautious. In an extensive review of studies on life after business failure, Deniz Ucbasaran and colleagues found that learning from failure cannot be taken for granted. Failure has financial, social and psychological consequences, and when these are severe they can even hold learning back. Someone flooded with shame finds it hard to learn, because they are busy surviving.

From this follows something that sounds paradoxical at first: to learn from failure, you first need to make at least partial peace with the fact that it happened. Not forget it, not embellish it, but put it in a place where it is no longer your whole identity. I described in more detail how to slowly trust yourself again after failure in the post Confidence after failure: how to get back up when things don’t work out.

Where separating is not denying

I want to be clear about the limits of what I am writing. “The failure of your company is not your failure” is not the same as “you are responsible for nothing”.

Responsibility remains. If you made poor decisions, it isn’t healthy to attribute them to the market or to chance. Separating yourself from the business doesn’t mean erasing the first column of the exercise. It means seeing those decisions as decisions, not as proof that you are worthless as a person.

When the failure has harmed others, guilt is appropriate. If employees were left without wages, if suppliers went unpaid, if friends or family lost money they invested in you, it is right that this hurts. That pain can be a path to repair — an apology, settling what can be settled, an honest conversation. The legal and financial questions that arise belong with experts in those fields; the emotional side, however, also belongs in a conversation that nobody should have to carry alone.

Sometimes the question isn’t the company. For some people, the failure of a company is only the latest in a series of situations in which the same pattern repeated itself — for example, taking everything on themselves and asking for help only when it is too late. Then separating from the business is not enough; it is worth looking at the pattern. I described the pressure founders carry while still building in the post on founder anxiety.

And when things are very hard, it is a matter of health. If, after a failure, you have been sleeping badly for weeks, no longer feel anything, feel there is no way out, or have thoughts that it would be better if you weren’t here, talk to your GP or a psychiatrist. In Slovenia you can call the crisis line Klic v duševni stiski on 01 520 99 00 (every day from 7 pm to 7 am) or the Samaritans helpline on 116 123 (24 hours a day). In an emergency, call 112. I also work with English-speaking clients, so if it is easier for you to talk about this in English, you are welcome to write to me.

What to remember

• Closing a company is one of the most common outcomes of the entrepreneurial path — by year five, roughly half of new businesses have not survived.
• Guilt speaks about an action, shame about the whole person. Guilt is something you can work with; shame feeds on secrecy.
• The end of a company is a loss that needs to be grieved — not just a business event.
• The more the company is the only pillar of your self-image, the more it hurts. Returning to other parts of life is part of recovery.
• Separating yourself from the business does not mean denying responsibility, but seeing decisions as decisions, not as a verdict on you.