The ultimate comeback kid.
Disney’s entrepreneurial journey shows that “one can certainly bounce back,” says Dan Viets, president of Thank you Walt Disney Inc. in Kansas City, which is in the process of restoring the original Laugh-O-gram studio. And after the bankruptcy, Disney “bounced back many times from the brink of financial disaster. He gambled everything he had on Mickey Mouse, Snow White and Disneyland, and he won each of those gambles,” recounts Viets in an email.
Walt Disney has not been alone in stumbling. Consider that just 34.7% of private-sector businesses started in March 2013 were still in operation in 2023, according to the U.S. Bureau of Labor Statistics. Through 30 years of collecting data, the BLS reports that in the first year of doing business the highest survival rate was recorded in 2021 in the Pacific division. That year, 84.6% of businesses started in Alaska, California, Hawaii, Oregon and Washington survived the first year. The lowest survival rate was in the South Atlantic division with just 71.4% of establishments started in 2008 in Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia surviving the first year.
Yet, some people who are forced to declare defeat in a venture are able to pick up the pieces quickly and go on to bigger and better things, while others retreat to the safety of a W-2 form.
What makes for such entrepreneurial resilience?
According to a study by Hong Zhao and Ardy Wibowo, certain psychological characteristics of entrepreneurs are also the traits that enable them to recognize new opportunities and continue to be engaged after a setback. So-called “self-efficacy” (the belief in the ability to accomplish a task) and “internal locus of control” (the feeling that a person controls their own fate) are personality traits that help entrepreneurs recover. (From Entrepreneurship Resilience: Can Psychological Traits of Entrepreneurial Intention Support Overcoming Entrepreneurial Failure by Hong Zhao and Ardy Wibowo.)
“In general, results show that psychological characteristics represented by an internal locus of control and entrepreneurial self-efficacy can support the willingness of entrepreneurs to gain from failure and raise their recovery capabilities, increasing their willingness to continue entrepreneurship and helping them to recognize new opportunities,” they write. “If entrepreneurs can better understand the failure experience and process, they may derive more insight into methods they can adopt in future ventures and new opportunities.”
Indeed, at the time Walt Disney’s company went bankrupt he “seemed never to lose faith,” according to Gabler’s biography.
“He was always optimistic…about his ability and about the value of his ideas…” said his business manager, Adolph Kloepper, the book continues. “Never once did I hear him express anything except the determination to go ahead.”
Karl LaPan, director of the University of Florida’s Innovate | Accelerate, which has two incubation facilities under the entrepreneurial support organization, says he has worked with thousands of entrepreneurs all over the world. In his work, LaPan says he’s rarely had an entrepreneur ask him for a description of failure, he says.
“Entrepreneurs are driven by the desire not to fail,” LaPan says.
Take Donna Rego, a dyed-in-the-wool entrepreneur whose various American businesses included a hot dog cart, two resale shops, a café and real estate. She says she just “somehow had the drive to keep going.” Now semi-retired and living in Patzcuaro, Mexico, Rego still has a few DJ gigs in Mazatlán.
“You have to be driven. If you’re not passionate about it, don’t do it,” Rego says.
The ability of the entrepreneur to swiftly recover from a setback differentiates true entrepreneurs from others, LaPan says. Like Walt Disney, “they believe in their ideas and themselves.”
LaPan believes some of those qualities are innate in some people. “A certain percentage is wired for entrepreneurship,” he notes. But it can also be acquired by life experience.
Indeed, a setback can be a great teacher, experts say. Entrepreneurs learn to better manage and navigate difficult situations, LaPan says. “Most people do not get things right the first time,” he says. “If you have some early setbacks, that can ground you.”
In an interview, Disney once said failure “makes you kind of aware of what can happen to you.” Because of his early bankruptcy Disney said he never had any fear “when we’ve been near collapse.”
Darrell Hazen who owns Hidden Treasures in Topanga, California, understands that firsthand. Hazen has operated multiple businesses from nightclubs to his colorful vintage clothing-antiques-thrift store. If something doesn’t work, pivot, he says.
“You adjust,” Hazen continues. “It depends on how open you are. You just look at the big picture.”
Pioneers will always face unexpected problems, writes Amy C. Edmondson, a professor of leadership and management at Harvard Business School in her book Right Kind of Wrong: The Science of Failing Well.
“The key is to learn from them, rather than to deny or feel bad about them, give up or pretend it should have been otherwise,” Edmondson writes.
Edmondson advocates for a healthy failure culture where “when failures occur, we learn from them with an open mind and a light heart and keep moving forward.”
Such a culture includes things like failure sharing, failure parties and rewarding intelligent failure.
And despite fears of being labeled a “Loser,” most people are sympathetic when an entrepreneur fails. Going-out-of-business signs and news reports of companies filing for protection under Chapter 11 are accepted as part of the business landscape today.
Bankruptcy laws in the United States are structured to encourage entrepreneurship, according to Nathalie Martin in American Bankruptcy Laws: Encouraging Risk-Taking and Entrepreneurship in Economic Perspectives.
