By Gabriella Cacciotti and James Hayton

Failure stalks the world of the entrepreneur. For them failure and the fear of failure are facts of life – whether it be losing a client, not being paid, an inability to deliver on schedule, out of control cash flow, or not spending enough time with their family.

For them courage is not the absence of fear, but the ability to take action to achieve a worthy goal in spite of the presence of fear.

We asked Hamdi Ulukaya, the Turkish-born founder and CEO of yoghurt company Chobani, whether he was ever afraid while building his multibillion-dollar business.

“Every day,” he replied. “The worry got bigger and bigger as people increasingly relied on the company making their future decisions. Because if I had failed, a lot of lives were going to be affected by it.”

Entrepreneurs plunge into uncertainty. The American Bureau of Labor Statistics charted the failure rates of businesses that began life between 1995 and 2015. After the first year, 21.2 per cent had failed; after two years, 32.1 per cent; after five years, 51.2 per cent; and after 10 years, 79.6 per cent.

Research by Shikhar Ghosh, of Harvard Business School, found that 75 per cent of venture-based start-ups fail.

Reed Hastings, chairman and CEO of Netflix, reflected: "As an entrepreneur you have to feel like you can jump out of an aeroplane because you're confident that you'll catch a bird flying by. It's an act of stupidity, and most entrepreneurs go splat because the bird doesn't come by, but a few times it does."

Hastings’ first entrepreneurial venture was Pure Software. At one point he actually asked the board of the company to replace him as CEO. They refused. He went on to be co-founder of Netflix, a business which he began with no idea whether customers would buy what it was offering or not.

Entrepreneurs have a paradoxical and complicated relationship with failure. On one hand, they are frequently advised that failure is a good thing. Business legend is replete with stories of entrepreneurs whose ideas failed and then failed again until one day they became a success. Fail fast and often is the constant refrain of the lean start-up movement and many others.

And yet, fear of failure is natural. Nobody really wants to fail. Failure has many ramifications which it would be foolish to overlook or downplay – potential bankruptcy, re-possession of your home, social stigma, the loss of people’s livelihoods and more. This is a constant in the life of any business.

Fear of failure is usually identified as an inhibitor to people starting a business. The inhibiting force of the fear of failure has been a dominant focus in research. Of course, fear does inhibit start-up activity, but that does not mean that only the fearless actually become entrepreneurs.

Our research shows that fear of failure remains omnipresent as a new business develops. There is no escape. This is the paradox of the fear of failure: it can inhibit and motivate. Rather than simply stopping people from being entrepreneurial, fear of failure can also motivate greater striving for success; you are always nearer by not keeping still.

To better understand the relationship of entrepreneurs with failure, we interviewed 65 of them in the UK and Canada. Some had established businesses, others were in the early stages of developing their business.

We define fear of failure as a temporary cognitive and emotional reaction to environmental stimuli seen as threats to potential achievement. Fear of failure is a state rather than a trait. Rather than a characteristic that some people have, and others do not, fear of failure is an experience that is widely shared but dealt with in different ways. 

Entrepreneurs are not distinguished from non-entrepreneurs by an absence of fear. What we found was that the relationship which entrepreneurs have with failure is much more complex than that portrayed by success stories. Failure and the fear of failure is nuanced and multi-faceted. 

The research identified seven sources of fear. These were repeatedly raised by the 65 entrepreneurs and have been validated by further research:

  • Financial security
  • Ability to fund the venture
  • Personal ability/self-esteem
  • Potential of the idea
  • Threats to social esteem
  • The venture’s ability to execute
  • Opportunity costs

Not all fears are created equal. The source of the fear is important. Our research found a positive association between the worries concerning opportunity costs and an entrepreneur’s persistence in pursuing their goals. In other words, when entrepreneurs contemplated the choice they had made in pursuing their venture and how this necessitated missing out on other opportunities, whether in their professional or personal lives, they were more motivated to carry on with the venture.

In contrast, when entrepreneurs worried about either the potential of their idea, or their personal ability to develop a successful venture, then they tended to be affected more negatively. They became less proactive. The fear of failure leads to fight, flight or freeze behaviours.

“It just makes me more aggressive to get this thing going as fast as I can,” one interviewee commented. Such defiance conforms to the entrepreneur as hero stereotype. It is the definition of courage: taking action in the face of fear.

For others, fear of failure has an impact on how people engage with tasks and how they make decisions. 

“Instead of being on the phone trying to get a customer, you are sitting there talking about why we need to call more customers or why we don’t call customers any more, why we should start emailing them. So, you are talking about it and not doing it,” one entrepreneur confessed. 

Procrastination can become commonplace. Numbers are crunched remorselessly resulting in paralysis through analysis. Decision-making is slowed down as all possible data is sought and the avoidance of making a wrong decision becomes the primary driver. In other ventures, a fixation on specific threats becomes the sole focus, creating target-fixation where that one thing matters and only one thing.

Experiencing the fear of failure can change the nature of goals that entrepreneurs set for themselves. Where fear of failure is greater, they may select either easier, more readily achievable objectives, or wildly impossible goals.

Ironically, selecting impossible goals allows us to more easily rationalise our failure to achieve them. Either way, fear has the effect of undermining effective personal goal-setting, one of the most valuable self-management tools that entrepreneurs have available to them.

A further outcome we heard from entrepreneurs was the tendency to escalate commitment to specific goals, at the expense of other activities and sometimes in the face of evidence that a path should be abandoned. Once a path had been chosen, negative feedback could actually lead to increasing investments in what otherwise might be considered losing strategies. 

So, how can and should entrepreneurs respond to the fear of failure? Our research revealed four key strategies that enable entrepreneurs to ensure fear of failure works positively:


1 Emotional self-monitoring and control  

Author JK Rowling was rejected multiple times before the Harry Potter series was signed up by Bloomsbury. She has described this as a process of “stripping away of the inessential”. It enabled her to focus on what mattered. She said: “I was set free, because my greatest fear had been realised.”

Emotional intelligence involves not only having the awareness of one’s emotional states, but also being able to control the influence of those states upon thought and behaviour. Some of our entrepreneurs were highly emotionally self-aware.

“If I’m in a lower mood one week and I look at my projects I see only negative things and reasons why it can’t happen," said one entrepreneur. "I started to learn that that’s actually not associated with the projects but it’s associated with my emotions."

Another said: “I’ve actually recently been learning to separate that anxiety out because I’ve learnt that it’s just transient."

Entrepreneurs may wish to adopt tools from sports psychology to cope with the fear of failure. In terms of winning gold medals, British Cycling has become the most successful sporting programme in British Olympic history. One of their keys to success has been a programme of work, led by psychiatrist Steve Peters, to help athletes manage their emotions during competition.

Emotional self-awareness is a skill that can be learned, and involves becoming aware of the signs of emotions intruding upon consciousness through feelings and moods, anticipating their impact on thoughts, and using this conscious awareness to limit their effects upon decision and action in competition.

The potential risk here is that through engaging in constant self-reflection, the entrepreneur develops neuroses which impede their own ability to act. In athletes, the effective self-monitoring tactics are developed and rehearsed off-line, rather than ‘on the job’. Once in action, the enhanced awareness becomes more automatic and natural, allowing an action orientation which doesn’t slow down real-time decision speeds.

Working to increase self-awareness is very powerful for entrepreneurs. Self-awareness can help curb the potent influences of negative emotions on goal-setting and decision-making.


2 Problem solving

“Anxiety helped in the sense that I would try and figure out every single flaw there was in my business – because all of them have flaws – so I was trying to figure out where is the hole?” one entrepreneur told us.

Actively seeking out flaws and weaknesses and doing something about them is a powerful means of reducing the fear of failure. 

Intuition is a potent source of information, and research has demonstrated that among experts, tacit knowledge, and gut instinct lead to rapid and effective decision-making. Such instincts are often associated with feelings rather than specific thoughts.

Feelings of fear driven by concerns over the idea, for example, can offer important signals that work is needed. When treated as such a signal and acted upon, rather than repressed or ignored, these emotional flags can actually help entrepreneurs eliminate weaknesses and flaws in their venture idea.

A proactive, problem-solving response to feelings of fear arising from the idea itself can help reduce fear. Paradoxically, our research also shows that such initiative-taking does tend to be inhibited when the idea itself is the cause of the fear of failure.

This suggests that taking a deliberately action-oriented approach, overcoming the desire to repress or ignore the problem, will be especially important. Of course, all weaknesses can never be eliminated. For any entrepreneur, perfectionism is potentially dangerous.


3 Learning

“Fear pushes me to work harder and to take more care of what I am doing, and to educate myself to be the best I can as I am developing these businesses,” said one entrepreneur. 

Entrepreneurs told us one of the ways in which they overcome the feelings of fear was through learning and information seeking. This might be for core knowledge, such as computer coding skills on the part of the software entrepreneur seeking finance, or for learning to cope with the high pace of activities that most entrepreneurs experience.

Entrepreneurs relied upon a wide variety of sources of knowledge and information, in their search for learning. This included formal education and training, although more often involved learning focused upon extensive information seeking, reflection, and importantly, social learning through networks and mentors.

Education, training and information seeking are a powerful antidote to the fear of failure. Learning can help mitigate fears resulting from doubts over personal abilities directly by increasing key capabilities. Through enhanced capacity, learning can also indirectly assuage fears concerning the ability to obtain finance, and the venture’s capacity to execute, as well as fears associated with letting others down.

But uncertainty is real and constant. Uncertainty and ambiguity are defining features of the challenge of entrepreneurship. There are always unknown unknowns out there, and so a willingness to continue to learn, gather information and insight from diverse sources can help to mitigate the fear of failure.

4 Support seeking

“A mentor is someone who allows you to see the hope inside yourself,” says Oprah Winfrey. For entrepreneurs in a constant battle with fear of failure, identifying mentors and utilising networks can be a vital source of reassurance.

Mentors and social supports are beneficial because they support the three prior activities of learning, problem solving and even self-awareness. Mentors are an important source of learning.

“Reaching out to mentors that are directly related to the business you are starting is really key and really helpful,” said one of our entrepreneurs.   

Speaking of the impact of the fear of failure on her problem solving, one entrepreneur said: “[fear of failure] just fuelled me to learn more; talk to more people and figure out why I was wrong in the first place.”

Another said: “Fear of failure forces you to come up with... better ideas and look for people that are going to give you constructive criticism along the process.”

Social forms of learning, from those who have been-there-done-that seems to be a particularly powerful antidote to the experience of negative thoughts and feelings among entrepreneurs.

Early stage entrepreneurs frequently benefit from local communities and networks, providing formal or informal access to mentoring from those with more experience. Through this process they learn that feelings of uncertainty and worry are commonplace, as well as what issues are deserving of attention and which problems will fix themselves over time.


Our research suggests the fear of failure is widespread and has both negative and positive effects on motivation, decision-making and behaviour.

One important outcome that should not be overlooked: motivation from fear can bring higher levels of stress, with potentially negative health consequences as well as undermining the life satisfaction of entrepreneurs.

While all may experience it, the ability to anticipate and manage fear is likely to have positive benefits for an entrepreneur’s quality of life and wellbeing.

Gabriella Cacciotti, Assistant Professor of Entrepreneurship, and recieved the 2016 NFIB Best Dissertation Award from the Entrepreneurship Division of the Academy of Management.

James Hayton, Professor of Entrepreneurship, teaches Managing Human Resources on the MSc Human Resource Management & Employment Relations.

Follow James Hayton on Twitter @ProfessorHayton.

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