Why Smart Entrepreneurs Plan to Fail (The “Failure Fund” Strategy Explained)

Let’s start with something that might sound a little…off:

You should be planning to fail in your business.

Not hoping for it.
Not aiming for it.

But planning for it.

Because here’s the reality:

Most entrepreneurs say they’re risk-takers…

…but when it comes time to actually try something new?

• A new offer

• A new marketing strategy

• A new product or service

We hesitate.

We pause.

We say things like:
“Things are going pretty well… let’s not mess it up.”

Sound familiar?

The Real Problem: Fear of Losing Money

Entrepreneurs aren’t afraid of hard work.

We’re not short on ideas.

We’re afraid of losing money on something that might not work.

And because of that?

We stay stuck making small, incremental improvements instead of taking the kind of risks that actually grow a business.

That’s where the concept of a Failure Fund comes in.

What Is a Failure Fund?

A Failure Fund is exactly what it sounds like:

Money you intentionally set aside to test ideas that might fail.

Not leftover money.
Not “if there’s extra.”

Planned money.

This gives you the ability to:

• Experiment without fear

• Take calculated risks

• Make decisions without second-guessing every dollar

The Coca-Cola Example: Why Failure Can Be Strategic

One of the most famous examples comes from Coca-Cola.

When they launched “New Coke,” it became one of the biggest marketing failures in history.

But here’s what most people miss:

They could afford to make that mistake.

And because they did, they were able to reintroduce “Coke Classic”—
which didn’t just recover their audience…

It helped them win back market share.

👉 The failure created the opportunity.

What Happens When You Don’t Plan for Failure

If you don’t build a Failure Fund, here’s what typically happens:

• You don’t try new ideas

• You quit too early

• You constantly second-guess decisions

Over time, this leads to:

• Slower growth

• Missed opportunities

• A business that feels stuck

Playing it safe is often the biggest risk of all.

The 90-Day Framework for Testing Business Ideas

Here’s a simple, practical system to implement a Failure Fund in your business:

1. Make a List of Ideas

Write down everything:

• “Smart” ideas

• “Dumb” ideas

• Ideas you’ve been sitting on for months

👉 Don’t filter—just capture.

2. Set Aside a Percentage of Revenue

Create a dedicated line item in your budget:

Your Failure Fund

This is your experimentation budget.

Start small if needed—but start.

3. Pick One Idea and Commit for 90 Days

No hesitation.
No half-effort.

Go all in.

• Execute consistently

• Improve as you go

• Don’t pull back early

4. Evaluate at the End of 90 Days

Ask one simple question:

Is this a “hell yes”?

• If YES → Scale it

• If NO → Cut it

No guilt.
No overthinking.

You tested it—that’s the win.

Why the Failure Fund Strategy Works

Let’s break it down:

If you test 4 ideas per year, you don’t need all 4 to succeed.

• 1 winning idea can change your business

• 2 can accelerate growth significantly

This is how real momentum is built.

Not through perfection…
but through consistent experimentation.

The Hidden Benefit: Momentum and Clarity

This strategy isn’t just about money.

It changes how you operate as a business owner:

• You stop overthinking

• You take more action

• Your business becomes exciting again

You start acting like the entrepreneur you were at the beginning—

The one willing to take the leap.

How to Start Your Failure Fund Today

Here’s your simple action plan:

• Create your idea list

• Decide what % of revenue to set aside

• Start building your fund

• Commit to your first 90-day experiment

Then:

Pick one thing—and go for it.

No half-measures.

Final Thoughts: Growth Requires Risk

The entrepreneurs who grow the fastest aren’t the ones who avoid failure.

They’re the ones who:

• Expect it

• Plan for it

• Use it as a tool

Failure isn’t the problem.

Not trying is.

Want More Strategies Like This?

Tune in to the full episode of the Cash Flow Podcast for a deeper breakdown of the Failure Fund strategy and how to apply it to your business.

And if this sparked something for you?

Share it with another entrepreneur who’s been playing it safe.