Failure is part of success, especially in a cutthroat and far-from-certain world of business. There are many reasons why companies fail or why some perished the way they did after achieving prominence. The stories presented here impart lessons that one can apply to life in general.
New entrepreneurs like you can seek motivation from these insights to be better at what you do. You don’t have to be perfect, but you can be more careful about running your business. One is to find a trusted e-commerce platform for your first online store and manage it efficiently.
1. Nothing Is “Too Big to Fail”
Lehman Brothers filed for bankruptcy in 2008. It was one of the largest banks in the US, with total assets of $639 billion. The investment bank and other financial institutions found themselves in the center of the subprime mortgage crisis when the housing bubble collapsed.
What followed was the Great Recession that prompted the US federal government to bail out certain companies, mostly banks, whose failure may disrupt the whole economy. GM, Fannie Mae, and Wells Fargo were among those that received bailouts amounting to billions of dollars.
Lehman Brothers was not on the list of recipients and remained the biggest bankruptcy in the US. Interestingly, the bank’s story inspired movies such as Too Big to Fail.
The lesson: ultimately, a company’s asset size does not guarantee its continued existence given the circumstances, unless its failure bears grave consequences and requires intervention.
2. Bankruptcy Is Not the End
Some companies did manage to turn their life and reorganize after filing for bankruptcy. Here are a few companies with a successful turnaround story:
- Twinkies maker Hostess Brands
- Theme-park operator Six Flags
- Energy infrastructure company Kinder Morgan
- Pizzeria chain Sbarro
- Entertainment company Marvel
Interesting side story: Apple had its darkest moments when it was 90 days away from going bankrupt in 1997. The report went on that rival Microsoft made a $150 million investment in the company as part of a settlement.
The lesson: You can find ways to revert the situation to your favor no matter how bleak it looks. Also, there are a few instances when you find allies among your competitors.
3. Rapid Growth, Slow Response Can Be Detrimental
This article explores the common themes or patterns among the biggest corporate failures. Let’s look at two examples:
- Parmalat is engaged in producing dairy products, primarily UHT milk. It is the biggest bankruptcy in Europe, and its 2003 bankruptcy has to do with the aggressive acquisition of companies using debt.
- Kodak is a generic term for cameras, proof of its place in the industry. However, the company took time to embrace digital photography until competitors overtook it. Interestingly, Kodak is moving to pharmaceuticals with a $765 million loan from the government.
The lesson: Too much, too late. It’s easier said than done, but tend to your business’s growth and proceed to any plans for expansion with care. Quick reaction time is also crucial.
4. Some Ideas Are Better Off as Such
Not all products get the attention and acclaim even if an already-recognized name sells them. These failed products are proof:
- Microsoft’s Office Assistant Clippy was active from 1997 to 2001, resurfaced in 2019 as stickers, and removed again.
- Google+ was supposed to beat Facebook when Google launched it in 2011. However, the Google service did not produce the desired results and was discontinued in 2019.
- Ford’s Edsel is a classic example of product failure, to the tune of $400 million, going to development and marketing. The line of cars did not sell, so Ford discontinued the line’s production. There’s a modern twist to this car of the future, as Edsel is gaining attention as a collectible.
Lesson: A product may sound great in theory but may flop in real life. If you don’t have many resources to spare, go back to the drawing board, and fine-tune your idea.
Something’s Gotta Start Somewhere
Count this as a bonus tip and a reminder that every great company starts somewhere. It can be the garage, basement, or bedroom. Capital doesn’t even matter at this point.
Carry on with your business, stand up after the fall, and try until you succeed.