Most businesses stumble at some point. How you respond decides whether the failure becomes a setback or a turning point, and the research has some useful pointers.

In 1989, I opened an Italian restaurant in Tsim Sha Tsui, Hong Kong, where the waiters sang opera arias between courses. It was a lot of fun, but it was not a good business, and it closed in 1993.

I had assumed running a restaurant was easy. It isn’t. The location was wrong, the costs were too high, and I didn’t know the trade well enough to see either problem early. Around the same time, I put money into film production and property. Both businesses struggled and were sold in the mid-1990s.

I share this because founders tend to talk about their successes and quietly bury the rest. Yet failure is a normal part of business. According to the U.S. Bureau of Labor Statistics, only about half of new U.S. business establishments are still operating five years later. Hong Kong is no different. In 2025, a record number of companies registered in the city, but the South China Morning Post reported that more than 99,000 were dissolved in the same year.

Here are five lessons I have learned about failing — and about recovering.

Most of my early setbacks came from businesses I entered because they looked exciting, not because I understood them. The pattern is common. CB Insights’ 2026 analysis of startup shutdowns found that 43% cited poor product-market fit. I suspect many of those founders were very capable.

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