Even the most successful founders of big businesses make mistakes. Sometimes, those business failures lead the company down the path of debt and bankruptcy.
Only two-thirds of businesses with employees manage to make it past their second year. Seven out of ten fail within ten years of establishment.
At least there is a lot we can learn about some of the biggest failed businesses out there. Find out why organizations fail and how to avoid making the same mistakes.
It was the year 2000 and Reed Hastings, the founder of Netflix, met with Blockbuster’s CEO John Antioco to propose a deal. Hastings proposed a buyout deal, but the Blockbuster CEO refused to accept the offer. Antioco believed there was no future for an online monthly subscription service like Netflix.
At the time, Blockbuster was a massively successful company in the video rental industry. However, they failed to alter their business strategy to account for the rising demand for subscription service convenience. Blockbuster went bankrupt in 2010.
What we can learn from Blockbuster’s failure is that pride is one of the leading causes of business failure.
Toys “R” Us
Toys “R” Us is another company that missed a golden opportunity for the future. In 2000, the company signed a ten-year contract to be the sole toy seller on Amazon. Despite the contract, Amazon allowed other vendors to sell on the site.
In 2004, the toy company sued Amazon to terminate the contract. Toys “R” Us should have created an e-commerce presence rather than relying on Amazon.
By the time they realized their blunder, it was too late. This mistake led to the company filing for bankruptcy in 2017.
Borders once had locations all over the world but the company accumulated massive debt.
Borders concentrated on CD and DVD sales instead of digital movies and music. Instead of providing more digital content, the company focused on its physical stores. With more people buying books online, Borders fell into debt and filed for bankruptcy.
What you can learn from Borders is that the right financial service, like IMTAAA Brisbane Bookkeeping Service, can help you avoid the same fate.
Kodak had one of the first digital cameras in 1975 but failed to release the technology to its customers. Because the company put so much faith in their traditional film cameras, they missed the opportunity to flourish.
Instead, their competitor Canon took the lead in the market. Kodak failed to adapt and appeal to their consumers. When film became antiquated and digital became king, Kodak filed for bankruptcy.
What We Can Learn from These Famous Failed Businesses
While no one can see into the future, it’s crucial for a business to try and read new trends and plan ahead. Companies need to adapt and alter their business model to fit customer demand to maintain success.
Lack of planning and ignoring customer needs are two of the biggest reasons companies fail. If you have your own business, learn from these failed businesses and always be willing to change your strategy.
If you want to avoid these business fails, check out our blog for even more expert tips.