Ten Business Ideas That Failed, and Why

Everyone loves a winner. As an entrepreneur, you want to see your small business succeed. You don’t have time for failure.

However, some businesses do fail. To avoid this fate, let’s review some ideas that have failed in the past. This article lists ten business failures and discusses their downfall.

1. New Coke

Coca-Cola sweetened the recipe for their cola in 1985. Although many people liked the new taste, there was a vocal backlash. Within three months, the company reintroduced the original flavour as Coca-Cola Classic, which was soon outselling New Coke.

If you have built a brand that people feel passionately about, you need to be careful about changing it. Customers of your small business help it grow, and you need to keep them loyal.

2. Boo.com

A famous casualty of the dotcom bust, Boo.com was an Internet fashion retailer. Attempting to buy market share, the company burned through over $100m in eighteen months before running out of money.

Keep a tight control of your budget. And know that not all business models can transfer successfully from the high street to the Web.

3. Polaroid

Polaroid Corporation was founded in 1937 to manufacture polarized sunglasses. They successfully switched their business in 1948, producing the instant cameras with which the name remains synonymous.

However, they failed to make a second transformation to fend off the threat from digital cameras. With dwindling sales, they filed for bankruptcy in 2001.

The marketplace is constantly evolving, and as an entrepreneur you need to ensure that your small business can adapt.

4. Barings Bank

Long before the credit crunch, another banking institution – Barings Bank, the oldest merchant bank in London – failed spectacularly. It collapsed in 1995 after Nick Leeson lost £827m speculating on futures contracts.

It’s important to keep track of your small business’s assets, and closely monitor your employees to make sure they are spending your money responsibly.

5. Sinclair C5

The Sinclair C5 was launched in January 1985. It was a radical vehicle: a battery-assisted pedal tricycle. Sir Clive Sinclair, its inventor, thought it would revolutionise commuting.

Seen as impractical and even dangerous, it failed to sell well and became the butt of many jokes.

If your small business is too “out there”, or even uncool, you will have a difficult marketing task and a potential flop.

6. McDonald’s Hulaburger

The Hulaburger was intended for Catholics who couldn’t eat meat on a Friday. It featured a slice of pineapple instead of a beef burger. When it was test marketed in 1963, it flopped.

In contrast, McDonald’s Filet-O-Fish (which contains fish rather than meat) has been much more successful.

The lesson: if at first you don’t succeed, change the formula and try again. Occasional minor failures in your small business help it adapt, allowing you to try new ideas before spending too much on them.

7. The Pony Express

The Pony Express was set up in April 1860 to transport messages on horseback quickly across North America.

The introduction of the First Transcontinental Telegraph provided a new means of communicating, and was far quicker and more reliable. The Pony Express ceased operation in October 1861, two days after the telegraph line opened.

If your small business relies on manual processed, you need to automate them. Otherwise, your competitors will and you will have a business failure on your hands.

8. ITV Digital

In 1998, a consortium of three companies – Carlton Television, Granada Television and BSkyB – won a government auction to provide the world’s first digital TV network. The service launched as ONdigital. BSkyB was later forced to withdraw and the service was rebranded ITV Digital.

ITV Digital was in direct competition with BSkyB’s digital satellite television from the outset, and failed to compete. Despite a massive investment licensing the TV rights to the Football League, ITV Digital went into administration in 2002.

It’s difficult for a new business to compete on equal terms with an established market leader.

9. Kim Basinger Buys a Town

In 1989, Kim Basinger bought the small town of Braselton, Georgia for $20m. Her intention was to build movie studios and host a film festival to attract tourists.

This venture was never successful. It highlights the importance of location, something you should be vigilant of in your own small business.

10. Betamax

Sony developed the Betamax video tape format in 1975. It was the first system to have significant commercial success. However, JVC chose to create their own format – VHS – and a fierce format war ensued, which VHS ultimately won.

If your small business relies on market dominance, a competitor may come along with better technology or a bigger marketing budget. If the market is only big enough for one business, yours had better be the one.

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