Who is not mistaken, he does not live, or a bad experience of running a toy business of a resident of Belgorod
If we are guided by the Pareto law, then out of 10 ideas launched into real life, 8 will fail and only two will survive. We all love to read the success stories of entrepreneurs, but we often don’t think about the fact that a huge percentage of projects fail and people lose money. Sometimes these are amounts of tens and hundreds of millions of dollars.
We will talk about such projects today.
It is impossible to do business without risk. Where does it all start? Well, initially there is a promising idea in which there is a desire to invest money. Moreover, it should be noted that I would like to invest not only the previously estimated amount, but also everything that is on the "balance sheet", if only it would work! After that, you just have to wait ... maybe you will be lucky.
Let's look at the top 6 business projects that did not meet either the investments or the expectations of the investors
Business project Yo-mobile
The average price for a vehicle of this type, depending on the type of equipment, ranged from 450,000 to 490,000 rubles. The release of this hybrid model was planned for early 2021.
The financial investment amounted to approximately 250 million euros. During the entire development phase, only four working copies were created. And one of them, as an advertisement, was presented to the most famous and provocative Russian politician - Vladimir Volfovich Zhirinovsky.
The body of the Yo-Crossback EV hybrid produced had only three doors. Unfortunately, it did not work out to make a hybrid installation, for this reason, only electricity is used to operate the machine. The project was closed in the spring of last year.
Business project Sputnik - search engine
On May 22, 2021, the developers of the Russian company Rostelecom created a search system and a whole Internet portal, which was named Sputnik.
Development price - US $ 60 million. In the first few days, the number of transitions to other Internet resources amounted to more than five million. But already at the beginning of September 2021, the same indicator dropped to 16 600 visitors. At the moment, according to LiveIntrnet statistics, at least 1,000 people visit this Internet portal every month.
Celebrities do not always achieve the same success in business as in creativity. More often than not, we hear about the failed projects of talented artists. From Spielberg's drowned restaurant to Portman's vegan shoes: Thinking back to some of the worst startups ever.
Kim Basinger Cultural Center
The American magazine Entrepreneur, analyzing the failed business ideas of celebrities, put the actress in first place in the rating of "epic failures".
In 1989, Kim, together with the Georgia State Pension Fund AmeriTech, was going to buy the land on which the city of the same name is located from the Braselton family. The amount of the transaction was $ 20 million. The actress began by buying a bank building in the city center for $ 600,000.
Basinger planned to turn the city into a cultural center - to hold film festivals and art exhibitions to attract tourists, but the matter did not go further than talk. After the actress was ordered to pay $ 8 million for refusing to shoot in the film "Elena in a Box", Kim filed for bankruptcy. AmeriTech terminated the deal, losing millions. And Basinger sold the purchased building for the same $ 600 thousand to pay off debts.
Bono Investment Company
Leader of U2 is a co-founder and managing partner of Elevation Partners, a privately held entertainment and media company.
Things were going well at first, but then Bono's decision to invest in Forbes and Palm Inc. led to multi-million dollar losses. 24 Wall Street named him America's worst investor. Nevertheless, Bono's business remains afloat, and in 2021 the musician was invited to TPG Capital corporation as a special technology consultant.
Kanye West's Clothing Line
West has been saying for years that he wants to create a fashion brand. Towards the end of the 2021s, the rapper assembled a team of specialists and got down to work. The collection was inspired by the ideas of Alexander McQueen, Phillip Lim and Chris Van Assch, and searched for vintage items at thrift stores and at the Los Angeles Rose Bowl flea market. Insiders reported that Kanye delved into all the details and worked on the collection from morning to night, making it a priority.
By digging deeper, it is realistic to identify the exact reasons why there are unsuccessful startups that have seemed to be successful for a long time.
According to the publication published in the print edition of FastCompany about the conducted research "Why Most Venture Backed Companies Fail", about 75% of all created startups that have successfully received funding from the venture direction, sooner or later close. And based on the article Statistic Brain, Startup Business Failure Rate by Industry, we can conclude that after a successful five-year existence, at least 50% of companies are closed, and after a decade of practice, more than 70% of them are closed.
Here is a list of the most common causes of failed startups that have been closed:
- lack of concentration;
- lack of motivation and creative zeal;
- pride, and as a result inadequate response to healthy criticism; li >
- following the wrong advice;
- lack of a curator;
- withdrawal from circulation of large assets, in a short time period.
All of these factors are based on trends in business decisions made by managers. There is a more precise formulation of the reasons why failing startups occur, they are published in CB Insights in the article the Top 20 Reasons Startups Fail, among them it is indicated:
- no need for a product on the market;
- the project has gone bankrupt;
- not professionally selected team;
- excessive competitive activity;
- overestimated cost of the product itself;
- the product being produced was of too low quality;
- not thought out basic business model;
- marketing is not built at the proper level;
- ignoring consumer requests.
It is worth noting that all unsuccessful startups have problems with the released product over time. As a result, the emergence of problems with leadership, the inability to create a strong team, to ensure the launch of a business layout and business processes. But the onset of bankruptcy is far from the only reason that failed startups appear. It is logical to argue that even with large investments, the danger of a startup failure should not be ruled out.
This unsuccessful startup has existed since 1997, its final failure came by 2021. In total, this project managed to attract $ 40 million in investment funds, its valuation at its peak reached over $ 300 million. Jawbone specialized in the production of compact speakers and fitness bracelets. By 2021, the problems that arose in the company became known to the general public, in the same year the company completely stopped producing its devices. The problems at the Jawbone enterprise were so serious that against their background, the company's management was forced to refuse help from customers.
In the biography of any successful person there was at least one loud failure, which made him in the end wiser and more experienced. “Success is a bad teacher. It makes smart people believe that they cannot fail, ”Bill Gates once said. How right he is!
Gates and Ford Startups
It is known that Microsoft was not the first startup of Bill Gates and Paul Allen. The seventeen-year-old child prodigy founded the company Traf-O-Data and was going to produce meters for monitoring traffic: the data of these devices were supposed to improve the regulation of urban traffic. The new gadgets were supposed to be snapped up by road services across the country. Perhaps this would have happened if it had been possible to fix all the malfunctions of the devices. Once, when a potential customer came to see the meter, he refused to work at all. “We made some money and had a lot of fun,” Bill Gates later recalled.
But Henry Ford, before becoming the father of American mechanical engineering, was burned three times in unsuccessful enterprises. The first gadget of Akio Morita (co-founder of Sony) was a rice cooker: a useful thing in the household, only the rice in it turned out to be inedible. Colonel Sanders (his beard is on the KFC logo) received more than a thousand rejections before a restaurant agreed to take his secret recipe for fried chicken. The top of the business Olympus is not those people who do not know failure, but those who stumble, fall, but get up and continue to climb further.
Lesson learned: 80% (if not more) of startups fail in the first 18 months, so you don't have to stubbornly hold on to projects that are not destined to take off. It is better to save your time, effort and money for more promising endeavors.
Thomas Boone Pickens and the Lawns
The legendary American trader loves to tell this story and claims that it was his first failure that helped him become a successful entrepreneur. As in the fairy tale about Little Red Riding Hood, the story begins with the fact that the future billionaire had a grandmother. And my grandmother had six rental houses. She invited her grandson to mow the lawns around them and said that he could set the price himself. If she seems acceptable to the grandmother, then the grandson will receive this contract. Young Boone was already moonlighting by that time - he delivered newspapers for a cent apiece and decided that ten cents for a lawn was a luxurious income. As a result, for his sixty cents, he had to sweat from morning to evening: the summer was incredibly rainy, the grass grew like bewitched, and the novice entrepreneur also underestimated the size of the lawns. “Yes, the summer turned out to be unsuccessful, and you made a bad deal,” the grandmother sympathized. “Come on, I'll help you,” she suggested and… sharpened the mower sharper.
Lesson learned: in the words of the same grandmother: "Next time, you will seriously think before you set a price for your work." In general, don't bother until you know all the details, including the weather forecast and the rate of grass growth.
Jack Dorsey and his hobbies
Twitter co-founder and Dior shirt lover was removed from his position as CEO in 2021. Nick Bilton, an influential journalist for The New York Times, has written an entire book about Twitter, where Dorsey is portrayed as a bad guy who caused the company more problems than good. Potential investors saw him more often at baseball games, concerts and parties than in the meeting room. He left the office at six sharp to catch yoga, art classes, or design courses. Evan Williams, who succeeded Dorsey as CEO, allegedly said goodbye to him: “You can either design or run Twitter. You can't sit on two chairs. " “It was like a punch in the stomach,” Dorsey himself admitted. Nevertheless, he quickly came to his senses and plunged headlong into the development of the Square project, a popular electronic payment system in America, joined the board of directors of Twitter, and in June 2021 was appointed acting CEO, returning, albeit temporarily, to the chair from which he was kicked out seven years ago.
Lesson learned: if you want to stay at the top, you need to give yourself 200% to your favorite work - Steve Jobs and Mark Zuckerberg will confirm. Dorsey learned this lesson, and while working on Square, he was not intimidated by 16-hour workdays and meticulously delved into every detail, including the width and the exact position of the lines on electronic checks.
Cruel statistics claim that most businesses that start up go bust. However, businessmen are usually stubborn and, having gone bankrupt, they start again, and after going bankrupt, they take into account mistakes and start from scratch again. The third or fourth attempt is usually successful.
Reconomica hopes that our guest today, Yuri Sergeevich Rudakov from Belgorod, will also certainly achieve success in business. And today he wants to talk about his unsuccessful experience in the business of selling children's toys. Read and learn better from other people's mistakes!
Dream of your own business
Hello dear readers.
My name is Yuri Sergeevich Rudakov, I am 35 years old, I live in St. Belgorod. In my article I will tell you about my unsuccessful experience of running a business selling children's toys, which was launched in 2021 and closed already in 2021
My wife and I came up with the idea of a toy business immediately after the birth of our first child. In general, there are a lot of shops with children's goods in Belgorod. These are both chain stores and small private ones. When we went to children's stores and bought everything that caught our eye for our little one, it seemed to us that such a business would go uphill anyway and that it was simply impossible to “burn out” in such an activity. Unfortunately, we were very wrong about that. But more on that later.
Buy cheaper - sell higher
Once, after another shopping trip, sitting in the evening over a cup of tea, I invited my wife to think about my business. Although I held a good position, there was always a desire to have some kind of stable penny from my business. In addition, the wife on maternity leave was completely bored and often complained that she was tired of sitting within four walls, and with an assistant, in the person of her retired mother, she could well devote all her free time to some kind of part-time job.
Since neither she nor I possessed any special skills to provide services to the population, there was only one way out: to buy at a lower price - to sell at a higher price.
What exactly? Well, of course, so are the toys loved by children. Why? Yes, because the demand for them has been, is and will always be. It is difficult for a little man to refuse a request to buy a doll, car or cubes, any loving parent or grandparents will always follow his lead. It was decided: we are studying this issue deeper and moving from idea to action!
It is difficult for a little man to refuse a request to buy a doll, car or cubes.