Everyone loves a success story — we love to hear how everything started out, who had the first idea, how much work it involved and how spectacular the outcome was. There’s something special to admire about successful entrepreneur stories and they are often portrayed as ideal examples of how ingenuity, hard work and diligence pays off in the end. Seeing people overcoming obstacles and build a thriving business inspire us in trying new challenges ourselves. We simply like learning from people who already found success, and we always want to replicate what they have done.
The business world, however, is a tough racket, and as most business owners know, for every success story there are tens of failures. It’s hard to know why some businesses fail: some entrepreneurs may have started out with a terrible idea, for others, their product was out of place or out of time. Perhaps they failed to capitalize on their idea or their funds depleted without even launching their product. Some businesses have even failed after years of being leaders in their market, due to ineffective decisions or crippling inefficiencies. We owe it to ourselves to learn from these examples just as much as we learn from examples of success.
Here are some case studies of businesses destroyed by internal inefficiencies:
Launched in early 2008, BricaBox was meant to be a new, revolutionary type of social media platform.
Developed by Nate Westheimer, a NY resident, BricaBox combined elements of social networking, content creation and interactive media into a new medium, called “social content platform”. Critics and tech journalists welcomed the idea, considering it fresh and exciting, offering a new user experience amid the relatively dry social media environment at the time. But the dream was over for the newly found BricaBox company in June, the same year. The golden age for the company lasted only four months and the final version wasn’t even out.
Users had only the beta version on their hands and the company failed to make any money. As Nate Westheimer puts it, the company failed because it had deep issues with its financial backers, traction, team and vision. The planning was poor, funds were insufficient and the work was poorly executed. Decisions were made on a short-term basis, internal inefficiencies abounded, and the long-term vision was patchy, at best.
Nicknamed the “MySpace for Cars”, Boompa was expected to become a huge online presence set to rake in millions of dollars every year. Unfortunately for the company created by Ethan Lance and Dave Snider, this was not the case. Shut down in 2006 after a string of poor decisions, the company experienced everything from a chronic lack of funds and uninterested partners to unmotivated team members.
Right from the beginning, Boompa started on a strange note, as Ethan and Dave explain: “We wanted to start an online company. Any company, but we had to start one.” While it may seem optimistic, this mindset won’t get you far in the business world. After a little more thought, Boompa was launched in 2005, as an alternative for car enthusiasts and professionals looking for information on every car make and model. This community site, or social media platform for cars, once started, quickly became popular.
So why did they fail? Firstly, neither Ethan nor Dave had any business experience, and they didn’t know how to manage their finances. Poor marketing decisions meant that they spent almost all of their funds on ineffective advertising campaigns. They also had problems with their office space, suppliers, and other contractors. Their partners weren’t by their side at all times, bills were left unpaid and, slowly, their employees began to abandon ship. This string of chronic internal inefficiencies resulted in one of the most sensational business flops of the mid-2000s.
IonLab is the perfect example of what can poor management do to an otherwise good company. They had it all: sufficient funds from the government of India, trusty business partners, a rock-solid idea and a good product. But what they lacked was good management and efficient decision making. As Swaroop CH explains, IonLab lacked maturity in its management, and this is what made it fail. Problems were popping up everywhere: from shipping to sales management, to customer relations and services, all the way to financials. Although Swaroop points out that IonLab had good products to sell, the mindset and execution behind the company was defective.
Having a good idea, even having some backing from investors, simply isn’t enough to succeed. You need to make sure that your efforts are intelligent and well-directed. Lean on the tools and resources available to you and make sure that your business plan truly has everything it needs. So many software solutions, like the Scoro Software platform for relationship and task management, exist to help business leaders organize their businesses and clients, communicate tasks and expectations, and control financials. Just like sourcing the lessons from all the stories of success and failure in the business world, you need to make sure you avail yourself of every advantage to ensure success.
Flaviu Mircea is a freelance writer and professional student who contributes articles and insights into the challenges faced by the business community and, in particular, the issues facing the aspiring entrepreneur.