On the pages of our magazine, we often talk about successful business ideas and somehow forget to highlight the mistakes of a business, especially a large one. Let's correct the situation, besides it is very interesting to think about the reasons for such failures. because big business has everything - a day, entire departments of analytics and marketing.
The ONEXIM investment company has announced the start of a project to create a national, environmentally friendly car. Its budget was about 150 million euros. The developers said that the production of machines at an industrial pace will begin in 2012. Not far from St. Petersburg, a presentation of the price of a new car of about 360 thousand rubles was held. Then the launch date had to be postponed to 2013. And at the beginning of this year, it became known that the firstborn would roll off the assembly line by March 2015. The approximate cost also increased to 500 thousand rubles.
Experts believe that the release of e-mobiles will remain a dream, since the team is not very experienced, and the project itself is underfunded. ONEXIM admitted in 2011 that it was looking for co-investors. Sources have estimated that EUR 115 million in investment is still needed to sustain the project.
Solar panels
An unsuccessful example of Russian big business is the project of Rosnano and the Nitol group for the production of polycrystalline silicon, which is used in Usolye-Sibirsky Silicon solar cells. Since the beginning of 2009, the firm has invested in new project 9.4 billion rubles
But this area became profitable. Processing exceeded market prices by seven times. Now Nitol is asking the state for a subsidy equal to 4.7 billion rubles for the development of production. The opinion of experts is that such production has no future, since Russia is not the country where solar energy will be in the first place as, for example, in Spain. In it, solar energy has led to higher electricity prices.
Sweet crucifixion.
In 2004, the American Russel Stover confectionery company released New Product. It was a chocolate bar in the shape of a crucifix fifteen centimeters. The believing population was outraged by the novelty. He was joined by high-ranking clerics, who also felt that a chocolate crucifix was not the best The best way convey religious feelings.
Ford tradition.
Henry Ford, for the first time in 1908, released his Model T to the automobile market. In those years, it was a first-class car. Time does not stand still and the automotive market has developed rapidly. In addition, other companies appeared, and with them the latest models and types of machines. But Henry Ford, the head of Ford Motor, did not want to start producing new models, and the company produced the same T. As a result, Henry Ford lost 45 percent of the market.
Companies and entrepreneurs often set ambitious goals for themselves - to create a fundamentally new product or service, to find new approach to conduct business or, conversely, to stick to proven traditions, despite the changes. All this is done with the aim of making as much profit as possible, but some companies suffer losses instead.
In 2010, Mikhail Prokhorov's ONEXIM investment group announced the launch of a project to create an environmentally friendly "people's car". Its budget was 150 million euros. According to the developers, industrial production cars was supposed to start in 2012 at a plant near St. Petersburg, the price of the car was announced at 360 thousand rubles. Then the launch date was pushed back to 2013. And finally, in February 2013, it became known that the first mass-produced yo-mobile could be released in March 2015. The estimated price of the car also rose to almost 500 thousand rubles.
Many experts consider the statements about the start of serial production of hybrid cars unrealistic, since the E-Auto team is not experienced enough, and the project itself is low-budget. In 2011, ONEXIM admitted that it was looking for co-investors for the project. Sources estimated the necessary investments to support the project at 115 million euros.
Solar batteries "Rosnano"
Another example of an unsuccessful business idea in the Russian big business can serve as a project "Rosnano" with the group "Nitol" for the production of polycrystalline silicon for solar panels- "Usole-Siberian silicone". Since 2009, the company has invested RUB 9.4 billion in the project. However, this area turned out to be unprofitable: the cost of processing exceeds market prices by 7 times. Now Nitol has requested financial assistance from the state in the amount of 4.7 billion rubles for the development of production. However, according to experts, such production in Russia has no prospects, since Russia is not a country where solar energy can become a priority, unlike Spain, for example. There, the development of solar energy has led to an increase in the cost of electricity.
chocolate crucifix
The American confectionery company Russel Stover released a new product in March 2004 - a 15 cm crucifix-shaped chocolate bar. The chocolate novelty outraged believers. Later, high-ranking clerics also joined the protests, believing that an edible crucifix was not the best way to express religious feelings.
True to the Ford tradition
In 1908, Henry Ford introduced the Model T to the emerging automobile market for the first time, then it was a state-of-the-art car with good value for money. Years passed, the American auto industry was actively developing, new manufacturing companies appeared, new, modern types of cars appeared. However, the head of Ford Motor, Henry Ford, refused to release new models and the company continued to produce outdated T. As a result, Henry Ford lost his 45% market share.
In pursuit of beer profit
Beer manufacturer Schlitz in the middle of the last century was second only to Budwaiser in terms of turnover in the United States. The ambitious director of Schlitz decided to overtake the competitor by using cheaper ingredients and speeding up the fermentation process, which would allow him to sell more beer. At first, this technology really increased the company's profits. But this did not last long, as Schlitz beer tasted worse, in addition, cheap beer ingredients settled at the bottom of the bottle and formed an unpleasant-looking substance. Schlitz ruined its reputation, but could not be rehabilitated.
Heart stimulator
Manufacturer medical equipment Guidant sold more than 50,000 new pacemakers before it became clear that they were short circuits. And most of them have already been implanted in people. Guidant went bankrupt after 45 short circuits and two deaths.
Failed Acquisitions
One of the most unreliable segments in business is the Internet, where competition is off the charts and technology is improving every day. In such conditions, the conclusion of transactions for the purchase of certain services is always a certain risk. So, in 1998, AOL bought the ICQ instant messaging service, developed by the Israeli company Mirabilis, for $ 400 million. Then it was biggest deal. But since then, ICQ has not been able to succeed, giving way to competitors such as MSN, Skype, Google Talks and other services. As a result, the service was sold to the Russian Mail Group for $187 million.
The biggest failure of AOL can be considered the purchase social network Bebo in 2008 for $850 million. The success of Mark Zuckerberg's Facebook pushed the company to this step (the number of Facebook users increased by 150% monthly and reached 100 million by the end of the summer). However, AOL fails to create serious competition for the most popular social network in the world.
Over the next two years, the number of unique visitors to Bebo decreased from 22 million to 14.6 million per month, and then continued to fall. In the summer of 2010, Bebo bought out private foundation Criterion Capital Partners for $10 million, which is 85 times cheaper than the price at which the social network was bought by AOL. Now Bebo - small company with a staff of 50 people.
The Power Mac G4 Cube is considered Apple's pinnacle of design and business failure at the same time. Thanks to the special transparent design of the case and speakers, this computer was included in the collection of the New York Museum of Modern Art.
The Cube was sold between 2000 and 2001. Apple positioned it between the iMac G3 and the Power Mac G4. However, despite its innovative design, the computer was criticized for being too expensive. In addition, the cases of the first copies had defects, due to which they were covered with small cracks. In addition, the Power Mac G4 Cube lacked an audio input. To save the day, Apple lowered the initial cost, installed a more powerful PowerPC G4 500 MHz processor, replaced the CD drive with a CD-RW, and also offered more advanced NVidia graphics cards as an option. But on July 3, 2001, Apple announced that the Power Mac G4 Cube was being discontinued.
Some entrepreneurs know how to find and promote ideas, earning millions on them. But there is another category of businessmen, to whom money is brought almost “on a silver platter”, but they still manage to miss their chance! We present you 5 unsuccessful business decisions that have become almost classics, on which companies managed to lose millions and even billions of dollars.
Perhaps one of the most famous examples in show business is Decca Records' rejection of an up-and-coming band. The Beatles. Mike Smith, who is responsible for evaluating new talent at the company's London office, traveled to Liverpool to look for a new band. After listening, Dick Rowe decided that The Beatles would not suit their label, because, in his opinion, the time for guitar quartets had long passed, they were simply not interesting to anyone. In addition, The Beatles were already too similar to The Shadows, which was popular at that time (you know those?). But here EMI Records, adhering to a different opinion, signed a contract with the beginning group and did not fail - The Beatles became popular after the very first performance!
2. "Commercially unprofitable electric toy"
One day, an inventor came to William Orton, president of Western Union's telegraph division, and offered to buy a patent from him for $100,000. For the XIX century, this amount was simply unheard of! Naturally, William refused, calling the invention a "commercially unprofitable electric toy." But Alexander Bell did not get upset and organized his own company AT&T, which later became one of the most profitable in the business!
3. The New-York Times distributes subscriber PINs
The management of The New-York Times decided to cut paper costs. It was decided that bundles of newspapers would be packaged in so-called "backpacks", unnecessary office papers. As a result, press vendors in Worcester, Massachusetts, received a print run bearing the card numbers and pin codes of 240,000 New York Times subscribers!
4. New Ford Model
Henry Ford made a revolution in his time, releasing a car with excellent performance and an affordable price for the average American. Over the next 15 years, the automotive industry developed rapidly, new manufacturing companies appeared that produced modern cars. The only exception was the Ford Motor Company, which continued to produce the Model T with the same characteristics and design. As a result, Henry Ford lost his 45% market share.
5 Schlitz vs Budweiser
40 years ago, Schlitz was the second most popular beer brand in America, second only to Budweiser. Robert Uichlein, CEO of the company, decided to take the lead by reducing the cost of ingredients and speeding up the fermentation process in order to brew more beer at a lower price. This technology initially brought him huge profits! And everything would be fine if the beer did not taste terrible and did not spoil, forming a disgusting-looking slime. This was followed by another unsuccessful decision - the company decided not to do anything. Bottom line: sales are close to zero, the company's reputation is almost at zero. The Schlitz company could not rise any more and was bought out by competitors from Stroh Brewery.
In business (as in life) there are times when you want to close yourself at home, be sad and not show yourself to anyone. For example, when I ordered a large batch of goods for a promotion, and bullshit came, or when a long-time partner let me down and didn’t even pick up the phone.
It is the most difficult for young businessmen to experience such situations. But one failure is not a reason to close the business and go into downshifters. We've rounded up four stories of varying degrees of severity from seasoned entrepreneurs where they share what went wrong and what they learned from their mistakes.
The names have been changed, but the stories are real.
Don't rush if you can't see the fire
Except for some of my neural connections, no one was hurt then. Helped ingenuity and the ability to think logically. Since then, I am no longer in a hurry at all. I don’t see a fire, so we check everything inside and out. You can slowly and “with smoke breaks”, but carefully.
Don't promise to do what you can't
Once I undertook to make an online store project with a connection to a European goods aggregator. There were only 6 such projects in Russia at that time, and we had no experience even with ordinary online stores. The customer wanted a site on one management system, but in the end, when we had already taken the loot, we told him what we could not do on this system (it was a shame). They offered another option, and thank the Lord that I found a person who could do it.
In the end, they did everything well, without earning, however, even 1000 rubles on this project - they worked for the sake of work. And yet, the customer asked to transfer the website to another management system - bitrix (we never worked with them at all).
I did not consult with the programmer and the team, and told him the amount for the work "from the ceiling." Later it turned out that I took 2.5 times less than the cost of development. Saying: “Pay me more money! 4 times more!” was no longer an option. At least that's what I thought. I realized that I would not make a website for the customer for my own money, I had to refuse him. It was very dumb, it seemed that it was a failure, pain and generally the end.
Six months later, I found out that this customer still transferred his site to bitrix, and paid more than 450 thousand rubles for this (I forgave 140 thousand). After that, it became a shame: I could explain that I had incorrectly calculated the cost of the work and that the budget needed to be increased, and not be afraid that I would be impudent.
As a result, I no longer take unique projects without consulting with their direct developer.
Explain what is included in the cost
In general, it was like this: on the eve of the new year, a call from Khanty-Mansiysk (rich in the north, cool!) - “We urgently need a website for our private security company !!! Needed yesterday! We pay double the price or whatever you say." I named the standard price, they did it yesterday, shook hands, launched it into the light. Somewhere in February, a call from private security companies: “Why is our site not shown on the first line of Yandex?”. Explain what SEO is additional service, it’s like you have to pay for it (it was 2011, all that). The director of the private security company yelled obscenities at me, said that he would come to “our fucking Yekaterinburg”, and he also has a service weapon. And then no one will prove anything.
In the end, I returned the money to him, the conflict was settled. The site stood on the Internet under a domain purchased for the customer, but then closed on its own. Since then, I always tell customers that search engine promotion is not included in the development of the site. Three times, different words. And that it can ultimately cost several times more than the development of the site itself. And that in social networks to advance is also not equal to the development of sites.
And 6 more rules that would be good to follow
My biggest business failure is total ruin.
It was not even in Russia. It's simple: the growth of the dollar forced to change the course of development (the price of goods from China has increased). After 2.5 years of work (a year and a half only in plus and the last six months at zero or minimal profit), I had to close. It was a painful blow - I invested all the money in this business.
Then I took up another matter, already without reference to the dollar, but the powerful of this world ate it without chewing. After that he was engaged in the production of anti-skid tapes. Why did he leave - read in paragraph No. 6 the rules that must be followed in order not to screw up:
- Engage in the release of your goods / products, which does not depend on the exchange rate of $.
- Always be prepared for inspections by supervisory authorities.
- Laziness. Put away. Generally.
- Savings should not be everywhere. And work for the sake of postponing is not always necessary.
- You need to go to the area with which you are more or less familiar or in the one you are in love with.
- Don't work with friends! You will lose friends. But if you decide, then you need to negotiate on the shore: with contracts and the prescription of all points of partnership or cooperation.
Rejections are normal. Learn to accept them.
Another painful thing in life and business is rejection. In the supply of goods, in cooperation, in credit, after all. Don't take each one to heart and then google "spells to fail the enemy's business." Better learn to deal with your own failures.
However, you may be surprised to learn that you have to accept failure and fail often enough. Here are eight reasons why it's good for you:
1. Failure in business teaches you
“I didn't fail. I just found 10,000 ways that won't work." - Thomas Alva Edison.
People who make mistakes often learn faster. When you fail, you learn what works and what doesn't.
Venture capitalists have been known to invest in entrepreneurs who have experienced multiple business failures. They believe that the entrepreneur who has never experienced failure is the untested one.
Chriss Dunn (Founder of Skill Incubator) says: “My YouTube channel, ChrisDunnTV, has been stagnant for several years. After several videos failed to garner even 1,000 views during that time, I finally discovered the type of content that people found most valuable to themselves. Failure helped me learn about what people wanted to see and hear, and I achieved over two million views in less than a year."
2. You will discover what is missing
"Failure is a pointer to success" - Clive Staples Lewis.
Failure is simply a signal that something is missing. Failure shows you what you need to change in order to succeed. Through failure, you expose gaps in yourself, your strategies, your system, your business, and your team. You will learn about your weaknesses or shortcomings, which gives you an understanding of what needs to be changed or improved.
Through failure in business, you will find obstacles. After that, you can make a plan to enable you to jump over or bypass each of the barriers to your success.
“Like many entrepreneurs, I struggled to stay in shape because I convinced myself that I was too busy to eat healthy and work regularly. I have found that the causes of business failure lead to my inability to lose weight.” Chriss Dunn says
The reasons for failure are often those nasty little habits or conditions in your environment that guarantee failure before you even start. Once you identify and eliminate the causes of failure, this will open the highway for you to achieve your goals.
3. Failure in business makes you pause.
“In fact, there are times when you need to refuse because you are doing something by mistake. But if you are confident that what you are doing is right, then you should never give up.” - Elon Musk
Failure in business forces you to pause. This gives you time to analyze what you are doing and consider whether you should continue or should you give up. It forces you to consider the question, "How much do I really want this?"
As Stephen Covey says, "If the ladder isn't leaning against the right wall, every step we take just takes us to the wrong place faster."
Without time to think, you may end up wasting energy, energy, resources, and time on “the ladder against the wrong wall.”
4. Failure in business can be a sign of the beginning of success.
"Only those who risk going too far can possibly figure out how far to go." - Thomas Stearns Eliot.
Failure can be a sign of the beginning of success. Big failures are often followed by big achievements. You can't hope to achieve real success at anything by sticking to the small, being detached and trying to be safe.
Robert Kiyosaki shows this concept really well: “Winners are not afraid to lose, unlike losers. Failure is part of the success process. People who avoid failure also avoid success."
5. Failure in business often builds immunity to fear.
"There is only one thing that makes it impossible to achieve a dream - the fear of failure" - Paulo Coelho.
Fear of failure limits you. If you are afraid to fail, you are also afraid to take risks and grow fast. Fear of failure limits your growth. Frequent failures create some kind of immunity to the fear of failure. When you are not afraid of failure, you can accept any criticism and comments from your partners and clients.
As Aristotle put it, “There is only one way to avoid criticism: do nothing, say nothing, and be nothing.”
Chriss Dunn said, “When I was in my early 20s, I was in debt - my debt was $90,000 and I was almost out of cash. After failing my first business, I learned that my worst fears weren't all that bad.
I had to make short-term sacrifices, but the fear soon faded and freed my mind, allowing me to build a seven-figure business over the next two years.”
6. Failure in business creates entrepreneurial traits.
“Winning is great, sure, but if you're really going to make it in life, the secret to learning is failure. Nobody is invincible all the time. If you can pick yourself up after a crushing defeat and go win again, someday you will be a champion.” - Wilma Rudolph.
Failure is essential to building valuable character traits for entrepreneurial success. Character traits such as perseverance, perseverance and flexibility are vital to any kind of long-term success. Your ability to move on despite setbacks where others fail will set you on the path to success.
7. Failure makes success more valuable.
"Success is the movement from failure to failure without loss of enthusiasm." - Winston Churchill.
People value success much more after they have experienced failure. When you can remember the humiliating moments of failure before you achieved success, you appreciate success much more. You also don't take success for granted because you know how difficult it was to achieve.
As Ellen DeGeneres said, "Failure gives you the right perspective on success."
8. Business failure creates a history of strength
“No person ever becomes interesting without failure. The more you fail, after which you recover and improve, the better you become as a person. Have you ever met a person who always had everything, he did everything at once with minimal effort and no failure? There are probably very few such people, or they do not exist at all. - Chris Hardwick.
Failure creates your strong personality story. Remember how Steve Jobs was fired from Apple, the company he founded, before going back there CEO a little over 10 years later? Failure makes you more tolerant and forgiving of other people. The success you have in spite of failure in business delights other people, creating value in your experience.
Your setbacks from which you have been able to bounce back and succeed can also motivate people around you (such as your employees, your investors, and your colleagues) to work side by side with you and help you.
There is another big benefit of having a few setbacks in business - it makes you humble. An entrepreneur who has never experienced failure will tend to be arrogant. Worse still, this arrogance can create the false belief that you are infallible and lead you to make devastating mistakes.
Business failures can hurt, but we must view them as a positive experience. We must err, and err often, because in this we also open up opportunities for our success.
