Learning lessons when a small business goes under

— -- David Payne's sweets business went sour.

The South Florida entrepreneur had the culinary competency to create tasty, sprinkle-clad cookies and buttery caramel popcorn. He had a unique brand name — In-dulj — which is the phonetic spelling of indulge. And he had a small, treat-stocked shop at an indoor flea market.

What he didn't have: a steady customer base.

Slightly more than a year after launching his company, and a few months after he rented retail space in Port Richey, Fla., Payne couldn't keep up with expenses. As the snowbirds who flocked to Florida took off in spring, revenue fell.

"Sales were going up every weekend and things were doing well — up until the tourists left," he says. "Then business started dropping off."

Purchases by local residents didn't make up for the decline, and Payne soon realized he couldn't survive. He sold his baking equipment on Craigslist and closed up shop in March.

"It was heartbreaking," says Payne, who launched In-dulj Gourmet Sweets after being laid off from a public relations job in Atlanta. "To a certain degree I felt like a failure."

As he dealt with falling sales, a new opportunity arrived via e-mail: a PR-related newsletter listed an ideal job nearby. Payne applied and was hired. He closed the baking business on May 22 and began work at Fetching Communications three days later.

He's relieved that he can pay his bills — and harbors no bitter feelings. Exiting the business was painful, but Payne, 32, says he learned entrepreneurial skills along the way. He's also proud that he took a leap.

"I consider myself lucky to say that I gave this a shot," he says.

And he doesn't rule out a return to his baking business, even if it's years away.

"One day I hope to try it again, believe it or not," he says. "I haven't given up."

It can be devastating to give up on a business. But when financial problems, health issues or the day-to-day stress of running a firm get to be too much, many business owners have no choice but to pull the plug.

Small-business failure rates in the U.S. rose 40% from 2007 through 2010, according to a new report from Dun & Bradstreet. Even in non-recessionary times, about half of small firms fail in their first five years, according to data compiled by the Small Business Administration's Office of Advocacy.

Yet as many thwarted entrepreneurs have discovered, they typically have the strength and resilience to recover from their loss. Often, they're able to keep a wounded entrepreneurial spirit alive, and even nurse it back to health.

Of course, there are those who find it tough to move on. But many say that with some distance, perspective and support from friends and family, the sting eventually fades, and they can pull some life lessons from the wreckage.