Growth Mindset for Business Owners: How to Get Back Up When You're Knocked Down

Oct 5

9 min read

Key takeaways

A growth mindset for business owners means treating a setback as information about what to do next, not proof you're not cut out for this.
The first one to five years of a business, the mobilisation phase, is hard for almost everyone. Staying in the game counts as success.
Growth in a business is mostly invisible while it's happening. Pulling out too early is a bigger risk than going slowly.
Cash flow shocks like a surprise tax bill or new super rules hit hardest when there's no system for setting money aside.
Leaders with a growth mindset seek feedback and help their team work in their strengths, and research on managers backs this up.

In her third year of business, Kate opened a tax bill she hadn't seen coming. She'd been under the tax threshold for the first couple of years and hadn't set anything aside. The bill was nine thousand dollars, and she had no idea how she'd pay it.

“I got hit with, I remember it was a nine grand tax bill that I wasn't expecting. And I was just bumbling along blissfully, not paying any tax, you know, and then all of a sudden just got slammed with this bill and I didn't know how to pay it. And that is one of the moments where I thought, I'm gonna have to go back and get a job.” — Dr Kate De Jong

She didn't go back to a job. That moment is what this episode is about: how a growth mindset for business owners holds up when you're in the thick of it. It was the first episode in the Leadership quadrant of our Thriving Business Wheel, and we both got more honest than usual about the times we nearly quit.

We're Dr Kate De Jong, a PhD engineer turned business strategist, and Sam Morris, a Navy veteran who's spent 20 years in business working out what makes businesses tick and what makes them stall.

What does a growth mindset for business owners actually look like?

It's less about positivity and more about how you read a setback.

A growth mindset for business owners means believing the skills you're missing can be learned, and treating each setback as information rather than a verdict. A fixed mindset says you either have what it takes or you don't.

The idea comes from Stanford psychologist Carol Dweck, whose book Mindset: The New Psychology of Success (2006) set out the difference between the two. Kate described the fixed version as believing you've been dealt a set of cards and that's that. The growth version says these are new skills you can develop.

Sam made the point, drawing on Dweck, that neither is permanent: you aren't one thing for life. If you've leaned towards a fixed mindset, you can move towards a growth one. In business you're often forced to, because nobody arrives knowing marketing, sales, systems, legal and finances all at once.

Kate also recalled something a past guest on the show told us: expect about half of what you try to fail. She found that liberating. If failure is built into the plan, it stops feeling like a judgement on you.

Why are the first few years of business so hard?

Because it's the stage where you're building everything at once, with no guarantee it'll pay.

The early years are hard because revenue is unpredictable while you're still building the foundations. Kate's view is that the emotional toll is the real challenge, more than the strategy or the systems.

We call this stretch the Valley of Death, though Kate prefers a kinder name for it.

“That Valley of Death is a negative spin. The positive term of that is the mobilisation phase, where you're in full startup mode, where you are trying to build the foundations of the house that becomes your business.” — Dr Kate De Jong

Sam brought some figures to the conversation from her research that were more hopeful than most people expect. She shared that 92% of micro businesses (those turning over under $500k a year) aren't at very high risk of failure, and that 43% of sole traders made it past four years. She also pointed out that the survival numbers don't separate businesses that failed from people who simply chose to stop.

Kate's take is that just staying in the game is success. If you're still here in year three, you've already done something a lot of people don't.

What should you do when you want to quit and get a job?

Look, by all means. Then notice how you feel about what you find.

Treat the urge to quit as a reality check, not a decision. Looking at what a job would actually mean often shows you why you started your own business in the first place.

We've both done it. Sam has had plenty of moments where she's opened up Seek, and Kate admitted she gets to that point about every six months.

“I've jumped on Seek and I'm like, just gonna get a job. … Somebody else telling me what to do, somebody not listening to my ideas, somebody not letting me do it the way I believe it should be done.” — Sam Morris

Kate had the same response. Going back would mean a world of bureaucracy with limited control and influence, and she knows she couldn't do it. The job search didn't fix anything. It reminded us both what we'd be giving up.

Why does business growth feel so slow?

Because most of it happens where you can't see it.

Growth feels slow because the foundations you're laying don't show up in revenue straight away. The risk is giving up just before the work starts paying off.

Kate compared it to a garden. You water and feed something for weeks with nothing to show for it above the ground.

“So you pull the seed out of the ground because you can't see any progress, you know, and really it is patience and perseverance that allows the things to bloom. So you do have to go slow, it's not something you can force.” — Dr Kate De Jong

Sam pushed back on the obsession with speed that runs through business culture right now.

“We worship the hare so much and we kind of put down the tortoise, but we need business owners to be the tortoise.” — Sam Morris

She described it like having a rope tied to you that only lets out at a certain speed. Everyone around you seems to be running faster, so you try to keep up, and then you get yanked back and it hurts. Going at the pace the rope allows is how you stay upright.

How do you protect your business from cash flow shocks?

With a system that sets money aside before you need it.

You protect yourself by separating money for tax, super and profit as it comes in, so a big bill is already covered when it lands. That's the lesson Kate took from her nine thousand dollar bill.

It's timely. Since 1 July 2026, the ATO's Payday Super rules mean employers must pay super guarantee contributions with each pay cycle, and funds need to receive them within seven business days of payday, rather than quarterly. We talked about the pressure that puts on cash flow, especially for younger businesses that haven't reached stable income yet. Sam's view was that good systems take most of the sting out of it.

Kate also raised a gap: most sole traders and partners aren't required to pay super for themselves at all, so many don't. Her suggestion was to use the change as a push to set up Profit First if you haven't already. It's Mike Michalowicz's cash management method (Profit First, 2017 edition), where you move set percentages of each deposit into separate accounts for profit, owner's pay, tax and running costs.

Why does knowing your why help you keep going?

It gives you something to hold on to when the numbers aren't helping.

Your why keeps you going because it gives the hard stretches a point. When the numbers look grim, the reason you started is often the only thing still pulling you forward.

Sam used our AI Setup Workbook in a recent workshop to dig into her own why, and found she'd never really got to the bottom of it before.

“The crux of it all was not ever wanting people to feel like things were hopeless.” — Sam Morris

Kate's why is about freedom. She loves helping people be who they are and do what they love through small business, and she's fiercely independent herself. Working for someone else has never been where she thrives.

How does a growth mindset change the way you lead?

It changes how you handle feedback, competitors and your team's potential.

A growth mindset changes leadership because it makes you seek feedback and invest in developing people. A fixed mindset treats feedback as an attack and people's abilities as set.

Kate summed up the contrast in a few areas:

Setbacks: one voice says this proves I'm not cut out for this. The other says this is teaching me something I need to know.
Competitors: fixed-mindset owners feel threatened by competitors who are doing well. Growth-mindset owners get curious about what they can learn from them or how they might work together.
Feedback: fixed-mindset founders avoid it. Growth-mindset founders go looking for it, because that's where the gold is.
Skills: one says you either have it or you don't. The other says it can be learned.
The Valley of Death: one sees it as a signal to quit. The other sees it as the part of the journey that makes you stronger.

There's research behind the team side of this. Peter Heslin, Don VandeWalle and Gary Latham's study “Keen to Help?” (Personnel Psychology, 2006) found that managers who believe people's abilities can change are more willing to coach employees, and their staff rate that coaching more highly. Managers who saw ability as fixed invested less in developing their people.

Sam's own experience lines up with that. In the Navy she had superiors who encouraged her to volunteer, explore work outside her core role and find solutions, and she credits that with building her initiative. It's shaped how she thinks about developing staff.

“Many staff, many employees have never been given the opportunity to explore what their zone of genius is.” — Sam Morris

“Zone of genius” comes from Gay Hendricks' book The Big Leap (2009): the work you're both exceptional at and love doing. Sam's view is that a team working in their strengths is more loyal, more productive and more human than one showing up just for the pay.

One caution from Dweck herself. In her Harvard Business Review article “What Having a ‘Growth Mindset’ Actually Means” (2016), she warns against a “false growth mindset” where leaders praise effort alone. What matters is rewarding learning and progress, and treating setbacks as something to work through together.

Frequently Asked Questions

What is the difference between a fixed and growth mindset in business?

A fixed mindset assumes your abilities are set, so a setback feels like proof you're not good enough. A growth mindset assumes skills can be learned, so a setback becomes information about what to change. The idea comes from Carol Dweck's research at Stanford.

What is the Valley of Death in small business?

It's the early stage of a business, roughly the first one to five years, when you're building foundations and revenue is unpredictable. We prefer to call it the mobilisation phase. It's where many owners give up, often just before things start to work.

Is it normal to want to quit your business?

Yes. Both of us have looked at job listings during hard patches, Kate about every six months. What matters is using that moment as a reality check rather than making the decision on your worst day.

How can a leader build a growth mindset in their team?

Seek feedback yourself, reward learning and progress rather than effort alone, and help each person find the work they're strongest at. Research on managers suggests those who believe people can change coach more, and coach better.

What can you try this week?

Three small steps, no overhaul required.

Think of your last setback. Write down one thing it taught you that you couldn't have learned any other way.
Check whether you're setting money aside for tax and super as it comes in. If you're not, open a separate account this week and start with a small percentage.
Ask one team member, client or peer for honest feedback on something you're working on, and listen without defending.

“Courage is not the absence of fear, it's deciding that what you're building matters more than what you're afraid of.” — Dr Kate De Jong

Listen to the full episode

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