There is an optimistic and a pessimistic theory of failure. According to the first one, it is a path to success, and according to the second – it is a social verdict. “At school, if you ask a question, which according to the teacher is a ‘stupid’ one, this is a mistake. There is a difference between a child who has come to a wrong answer to a question by giving their best, and a student who doesn’t know anything. The former has to be encouraged to try again, and the latter has to be sanctioned for being negligent,” says Dobromir Ivanov, Executive Director of the Bulgarian Startup Association – BESCO.
We discuss with him, with Hristo Petrov, owner of Golden Vision Accounting Firm and with the IT entrepreneur Hristo Neychev whether in Bulgaria it is difficult to fail smartly or to have a second chance. They are not afraid to share how and why they have failed and what they have learned out of this experience.
Dobromir started his IT project when he was 24, and at 28, he liquidated it without owing any money. The business developed quickly but failed because it turned out that it was not properly positioned within the market.
Hristo Neychev - Photo Peyo Peev
Hristo Neychev tells about the fast success and the closing down of his fourth startup – Tryad Games. Six months after the game was released on the market, the company enjoyed enough loyal clients, but each new client actually cost more than the price they were paying for the game. Since the partners failed to increase the monetization and apply marketing strategies at a lower cost, they decided to close the company. “I prefer to close a business quickly and efficiently without going bankrupt. I warn the personnel 1-2 months in advance, I help them find a job, I pay everybody, I communicate with the clients and I quickly cease the activities – without unpaid obligations, without drama,” he explains.
Hristo Petrov is the Manager of an accounting firm, but he has learned how to manage his own company finances the hard way. When he opened his office 11 years ago, he started his business from scratch, worked at low prices and gained a lot of clients through expensive advertising. He decided that the company should expand, that it had to move to a high-end representative office, but they had disagreements and at the end, it turned out that he was barely covering the basic costs. This led to a personal and professional crisis, which he solved by changing his approach towards clients. “It was difficult for me to accept that I had failed financially. Failures kill your self-esteem, and self-esteem is important for a person who wants to attract new clients,” he says and adds that he is still recovering from a series of wrong decisions.
Hristo Petrov - Photo EconmyMagazine/Krassimir Svrakov
The three of my interlocutors have changed a lot in their way of thinking and acting after the ordeal. Hristo Neychev consults and teaches corporate innovation and business practices after he sold his last company – RGB Notes to Amazon. Hristo Petrov has changed his business model and has focused on expertise in new areas and development of a business network.
Dobromir is a co-founder of the Bulgarian Startup Association and, together with his colleagues, is fighting for a new legislation on bankruptcy of enterprises and natural persons to be introduced in Bulgaria. The Natural Persons Bankruptcy Act (known as the Personal Bankruptcy Act) is already under discussion in parliamentary committees, and the National Assembly has to adopt it within 6 months. Bulgaria is the only country in the EU without any debt protection.
One of the main arguments against the idea of giving more chances for business failures is the fear of misuse and fraud. If there is a register of risk entrepreneurs, this would protect their partners as well. Hristo Petrov suggests that there should be an option for quick court proceedings against incorrect debtors. “If you owe money to the National Revenue Agency, in just a few days, they could block your accounts. This is not applied in inter-company relations.”
Dobromir adds that it is very important to make a difference between failure that is due to negligence and dishonesty and failure that is due to lack of experience, for example. “The key to an economy based on knowledge and innovation is the opportunity to test something very quickly and to fail. Without this, such an economy is impossible. We see the results in Bulgaria – the economy is largely closed when it comes to domestic consumption of services.”
Dobromir Ivanov - Photo BESCO