What Failed Companies Can Teach Us
There’s a reason why 8 out of 10 companies fail within their first 18 months. The majority simply run out of cash, lack unique value propositions, face leadership breakdown, and most importantly the inability to make a profitable business model. Running a business big or small is difficult, and there are quality lessons future entrepreneurs can learn from the failures of past companies.
This isn’t to discourage young up and coming entrepreneurs from building their dream company, when you think about it even Apple, one of the most influential companies in the tech industry failed during the 90’s.
Watch for “The Next Big Thing.” You may have a brilliant idea up your sleeve, something that will utterly change the tech world forever. But don’t forget however good your product is you can bet your ass someone is working feverishly to improve it. It is essential for you to capture your target market as it exists today, but never neglect what can happen five years down the road. The biggest mistake you can make is automatically thinking everyone will still be using your product in ten years time. Remember Kodak? once the ranked the fourth most profitable brand in America until it filed for bankruptcy in 2012. “The Next Big Thing,” in this instance digital film drove this company into the ground.
Be in Touch with Customers: After coming up with a potential opportunity in a specific market the majority of entrepreneurs go into hiding. A complete understanding of of your target customer is imperative to whether or not your company ultimately succeeds or not. Your customers, not you hold the key to your company's success.
Adapt and Evolve: During the economic crisis, many companies failed because they didn’t or couldn’t adapt to their market. A great example of a company who failed to evolve and adapt is Blockbuster. The video rental business which was profitable for its launch, however the market was changing as well as the customers needs. No one wanted to physically go to the video store to rent a movie, instead they wanted their movies to be delivered and eventually stream onto their televisions. Blockbuster had the opportunity to adapt, their attempts came too late and the company’s debt climbed well over $800 million. If you fail to adapt and evolve to new trends then you’re surly on the path to failure.
Instant success shouldn’t be your sole goal: If you don’t love what you’re doing or what you’re selling and the sole reason you’re starting your company is to make a lot of money then you’ll ultimately fail. The media only portrays all the highest grossing businesses because those are the most successful. However the chance that your company will become the next Apple, Facebook, or Instagram is highly unlikely. Make sure you have a driving passion behind your business, ensure yourself that you are determined, patient, and posses a positive attitude. Success, while hard isn’t impossible, but it shouldn’t be the only reason to start a business.
Some companies fail it’s inevitable, but that doesn't mean your company has to suffer the same fate. There’s just as many lessons we can learn from failed companies as we can learn from the most successful ones. Before starting your business do some serious research into both successful and failed companies in similar markets as yours. Learn from their positive choices, and learn even more from the choices that sent them crashing to rock bottom.