8 Most Catastrophic Business Collapses in American History

Wednesday, June 6, 2012 at 7:24pm by Sandy Jones

Business collapses are typically marked by one of two things — either the business was unable to keep up with advancements in consumerism or technology, or the business broke the law in a big way. When big businesses fail, countless people lose their jobs. There can be a lot of finger-pointing. At the end of the day, quite a few of these major businesses wind up filing for Chapter 11 bankruptcy in hopes that they can eventually revive their dying conglomerate. Unfortunately, when the media takes hold of these businesses, they are often unable to dispel their unfortunate reputations.

  1. Enron Corporation

    Enron was an energy company based in Houston, Texas, originally founded in 1985 in Omaha, Nebraska. In simple terms, Enron’s downfall stemmed from failure to report their losses and debt from small investment partnerships. Arthur Anderson, a global accounting firm, signed financial statements that misrepresented Enron’s gains and losses and shredded documents that would provide evidence of this crime. Enron committed security fraud when it gave botched copies of their 10K report to potential investors and shareholders. They were also charged with insider trading, as Enron executives sold their stock for $1 billion before declaring bankruptcy. Lastly, they were charged with tax fraud. Kenneth Lay, Enron’s founder, died of a heart attack in 2006, not surprising considering his impending prison sentence.

  2. Napster

    Napster was created by Shawn Fanning as a peer-to-peer music sharing software in 1999. With its sleek, user-friendly interface, users could easily share music with one another from their own personal mp3 libraries for free. However, within months of its conception Napster found itself in massive violation of copyright infringement, and the Recording Industry Association of America filed a major lawsuit that would eventually lead to its downfall. Bands such as Metallica and Dr. Dre were angered by the free sharing of their music, some of which hadn’t even been publicly released. Amidst the drawn-out lawsuit, Napster experienced a surge in publicity that attracted millions of new users, but the fame was short-lived. In July 2001, Napster had to shut down its service, and filed for bankruptcy shortly thereafter in 2002.

  3. Atkins Nutritionals Inc.

    Formed in 1989, Atkins Nutritionals was the backbone of Dr. Robert C. Atkin’s ever-popular Atkins Diet, which dictated that dieters swap out carbohydrates for proteins like steak and cheese. The company sold products such as nutritional packets and packaged foods for consumption while on the diet, also making it easier to find low-carb versions of staples such as muffins, pasta, and cereal. Ultimately, followers of the Atkins diet preferred their own solutions or eating at restaurants to the foods sold by Atkins Nutritionals. Likewise, a number of other companies also began offering low-carb, pre-packaged foods, which caused the company to drop dramatically in sales. It was further weakened when Dr. Atkins himself died in April of 2003. Finally, in 2004, many dieters began abandoning the Atkins diet in favor of other diets that allowed the necessary indulgence of carbs. Those who had lost significant weight on the Atkins diet found that they rapidly gained it back the minute they could no longer eliminate carbohydrates from their diet, outing it as a fad diet. In 2005, Atkins Nutritionals filed for bankruptcy.

  4. Lehman Brothers Holdings Inc.

    Lehman Brothers was a financial services firm founded in 1850 by Henry, Emmanuel, and Mayer Lehman. What began as a general merchandising business blossomed into the fourth largest investment bank in the United States. However, in the midst of the economic crisis, Lehman Brothers began to make some faulty decisions when it came to the subprime mortgage market. As money was lent to people and businesses for homes when they did not have enough collateral, the economy worsened. Those that had simply put small down payments on their homes began to default on their loans. Stockholders began to get nervous and sold off their shares. As a result, Lehman Brothers was never able to get their investor’s confidence back. Lehman Brothers filed for bankruptcy in 2008, and was the biggest bankruptcy case in American history at the time.

  5. Borders

    Borders opened its first bookstore in 1971 in Ann Arbor, Michigan. Founded by two brothers, Louis and Tom Borders, it was right alongside Barnes and Noble as a book store mecca which was often multi-storied and carried a diverse collection of books both fiction and non. Borders once had a technological advantage when it created a software for its stores that predicted sales and helped keep inventory. However, Borders took a crucial misstep in the mid-1990s when the market was changing to primarily digital media. While competitors such as Barnes and Noble created the Nook tablet to satisfy digital needs, Borders outsourced its online market to Amazon. Borders also swapped out much of its inventory for CDs and DVDs, while Barnes and Noble pulled back on such items. Many customers were finding that it was easier to simply order books online or read them on their tablets. In February of 2011, Borders filed for bankruptcy, and then announced its pending liquidation in July. Over 10,000 people lost their jobs as a result.

  6. AOL Time Warner

    AOL, or America Online, saw its heyday in the early 90′s when the internet was becoming a staple for the average American. Complete with an extremely recognizable dial-up tone, AOL served as a place where content could be published and accessed, with its own email service. You paid for internet access by the hour and used keyword searches to score information on the web. This internet service provider had, at its prime, 30 million subscribers. Yet, as internet innovation grew with things like broadband, AOL was unable to keep up. In 2001, AOL merged with Time Warner, which turned out to be a giant error. The merger caused AOL’s customer base to shrink to under 19 million users, and Time Warner sought to spin off AOL into a separate publicly traded company. It did so in 2009, after the eight-year merger. AOL has never recovered.

  7. WorldCom

    WorldCom is a telecommunications company that underwent a major scandal in 2000. Founded by Bernard Ebbers, WorldCom inflated its profits by $4 billion via shady accounting methods, such as reporting expenses as company investments. At its peak, the company employed upwards of 80,000 people and was worth $180 billion. In 2002, WorldCom filed for bankruptcy. It claimed $107 billion in assets, topping Enron as the biggest bankruptcy in American history. The company was in debt by $41 billion.

  8. Kodak

    In 1888, Kodak’s founder George Eastman realized that producing a film camera that the average person could use would be an extremely lucrative business model. However, when digital photography began to take the forefront, Kodak failed to embrace the new technology. They projected that they had at least ten years before digital photography would become mainstream, what with the cost of equipment, the discrepancies in quality between the two mediums, and the difficulties in compatibility with printers and other extraneous equipment. Yet, in their ten-year window, they failed to adapt. Even when they did embrace digital imaging, they ran out of money and could no longer catch up to rapidly growing technology. Finally, Kodak declared bankruptcy in 2012.

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Take a Chance Gambling With Entrepreneurship

Monday, June 4, 2012 at 6:21pm by Sandy Jones

Have you ever spent hours imagining a design for a sports car or wanted to invent something that would change the way people communicate? Perhaps you have a tendency to always “work smarter, not harder” and make things more efficient. These are strong signs that you might have what it takes to become an entrepreneur.

 

Elements of Entrepreneurship

  • The first element of entrepreneurship is the motivation or desire to be one. As mentioned above, entrepreneurs tend to have a desire to make everything they do better, faster, or more efficient. This is what innovation is all about — the desire for improvement. Identifying this trait is the first key to unlocking the potential for great contributions to our world.
  • After you’ve decided to act on your entrepreneurial nature, draw up a business plan. This process is very similar to writing a good essay. Research, brainstorming, organization; all of those elements are used to create a solid business plan that outlines exactly what you intend to do with your ideas. From this statement, you will have a solid foundation to begin your business.
  • After determining what area of business you want to affect, the next step is to come up with your marketing strategy. What good is an innovated product if nobody knows it exists or why it would be beneficial for them? A marketing strategy answers the question of who you intend to market to and why. Evaluate your audience and compare it to the demand. Knowing where to plug into the market of consumers is the most important part of a successful entrepreneurial endeavor.

 

Types of Business Plans

When evaluating a business plan, you have a few options for where to launch your business from.

  • Home: Many a computer software developer started out working from the comfort of his own home. If your business model is small enough, such as remote management, writing a book, or researching something, your product can be used, marketed, and sold straight from home, reducing overhead costs dramatically.
  • Online: For projects strictly related to computers — software, applications, social networks, website development, etc. — you can utilize the benefits of online management. Supposing multiple entrepreneurs are working with you in the "company," you can share the project data and resources via cloud computing or more basic file sharing. This allows more flexibility to include people from different areas while still keeping overhead costs to a minimum.
  • Small businesses: In some cases, your entrepreneurial pursuit may include a small building. Perhaps you want to start a unique coffee shop or a specialty repair shop. You would need to find a space to rent or buy and strategize about location and appeal. This definitely increases the overhead, but marketing will be somewhat simpler.

 

Successful Entrepreneurs

Several successful entrepreneurs have paved the way for millions more to follow in their footsteps. These individuals have proven how a little innovation and planning can go a long way in making your destiny brighter.

  • Burton M. Goldfield
  • Goldfield was recently selected as a finalist for the Ernst & Young Entrepreneur of The Year 2012 program on June 2, 2012 according to a Market Watch press release from The Wall Street Journal. As CEO of TriNet, Goldfield has created a company that focuses on human resources assistance for other businesses and entrepreneurs. His contributions have allowed others to pursue their own dreams of innovation.

  • Mark Zuckerberg
  • The face of Facebook, Mark Zuckerberg is one of the youngest, most successful entrepreneurs of this time. The 24-year-old dropped out of Harvard, and according to an article by entrepreneur.com, the social network monger has only held one job: CEO of Facebook. The social network was launched in February 2004 and has since exploded in popularity, putting his net worth at more than $17 billion.

  • SpaceX
  • SpaceX is proof that Americans will take over where the government leaves off if deemed necessary. PayPal inventor Elon Musk has the only way to get to the space station now. His company is the first private company to make the roundtrip flight. It seemed our space explorations were temporarily put on hold with the retirement of NASA, but Musk has brought those dreams back to life. The internet and space entrepreneur intends to further his reaches in space and encourages more people in the private sector to dream just as big.

 

Overseas Business Sailing Away

Friday, June 1, 2012 at 8:44pm by Sandy Jones

The battle over limited jobs right now is already intense, but one factor that has remained largely overlooked is that of outsourcing. Not only are Americans competing against each other for the handful of jobs available, but in addition, jobs are being sent overseas to other countries. Although this sounds like an obvious problem with an obvious solution, you might be surprised to find out that studies have proven conclusively that outsourcing can actually benefit everyone in the long run.

 

What is Outsourcing?

When a company in the United States hires employees overseas to do a portion of their work for them as opposed to giving the jobs to Americans, the process is called “outsourcing”. In 2011, a total of 2,273,392 jobs were outsourced to other countries and nearly half of those were to reduce or control costs, according to recent numbers from Sourcing Line Computer Economics. India currently ranks highest as the top-rated outsourcing country.

Although there are many myths about the disadvantages of outsourcing, looking at the actual facts will help give you an idea of exactly what there is to gain from the situation.

 

Why Outsource?

There are many reasons large companies choose to send their work overseas to foreign workforces, but here are the most common ones:

  • More for less: To put it simply, there is an abundance of foreigners overseas willing to work for substantially less money than Americans. Because companies can pay lower wages and cut the cost of benefits, it serves as a huge incentive for them to export their work to other countries. Saving money is the primary reason companies outsource.
  • Increased productivity: When basic data entry or IT support is sent overseas, it frees up internet usage, manpower, and other resources that allows a company to devote more energy and focus to more specific, technical areas. Furthermore, it allows them to get a mass amount of work done in a short amount of time if they hire temporary employees to focus on one specific area at a time.
  • Boosts economic activity: The IHS released a study in 2005 outlining exactly what benefits arise from outsourcing. Contrary to popular opinion, outsourcing does not have an overall negative effect on jobs in America. Rather, it actually adds jobs because of the economic activity it generates. At the time the report was released, worldwide sourcing of IT-related software and services added 257,042 jobs in one year.

    Because of the amount of jobs sourced-out, inflation was maintained at a lower rate while still keeping productivity high. This in turn increased the actual hourly wages for U.S. workers. More importantly, the activity overseas generates products and services that other countries purchase from us, which boosts the economy as a whole significantly.

 

Types of Outsourced Work

At this point, you’re probably wondering what kind of work is actually sent outsourced. In general, most of the work that is outsourced relates to Information Technology (IT) and call center support. However, a recent article by the New York Times highlights the growing trend of using outsourcing for a variety of specialized work.

Drew Smith, a musician trying to make a living, needed a music video for one of his songs but was short on cash. Taking ingenuity to the next level, Smith decided to outsource the project to Bangalore, India to give it traditional Bollywood-style movie magic. The video for his song “Smoke and Mirrors” was not only cheap to make ($2,000) but it was actually quite popular. In 14 days, the video was viewed more than 180,000 times.

Other unique areas of work that have received attention in the world of outsourcing were on a larger scale. IBM Computers, the leading U.S. computer manufacturer, contracted an order for a microchip design from an Indian company that required significant expertise.

The important lesson to take away from these examples is that Americans are learning to experiment and test the abilities of overseas workers. Overall, it becomes clear that the benefits of outsourcing definitely outweigh the costs and being afraid of the myths is an unwise evaluation of the facts.

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8 Ways to Use Pinterest for Small Business Promotion

Friday, June 1, 2012 at 6:39pm by Sandy Jones

Browsing through a virtual pinboard, you’ll find anything from step by step DIY projects to wedding ideas to this summer’s hottest fashions. Pinterest is an online platform which facilitates discovering new things and organizing your interests into simple categories. Most importantly, it connects millions of users (11 million as of April 2012) and offers a platform for feedback and commentary. There are many ways small businesses can benefit from Pinterest, and free exposure is one of them. Here are 8 other ways Pinterest can be used for promoting your business.

  1. Use original photos and content to drive traffic

    The popular section on Pinterest will show you that original pictures and content are the most popular. As these original and unique pins get repinned and favorited by users, it drives traffic to your Pinterest and/or website. Remember, your content represents your brand, so choose content that reinforces your brand’s philosophy.

  2. Use boards as a virtual inventory catalog

    Use your boards to display your products according to categories so that viewers can easily pin items they see onto their own boards. Pinterest by nature is visually engaging, so use it to your advantage to reach out to customers. Whenever possible, include the cost of the item, which will automatically show up as a banner across the corner of your photograph. This attracts people to your website who are actually interested in buying the pinned product. If you’re promoting a service instead of a product, always link back to your website and post a relevant photograph.

  3. Build a wider following by pinning related content

    Traffic referral is a result of what content you post. With that in mind, if you follow other major brands that are relevant to your business and get a follow back, you gain a bigger network and audience. This is the whole purpose of social networking – sharing other’s ideas and building relationships. Make sure your boards are not just focused on your product, but also incorporate related topics and ideas.

  4. Promote brand and philosophy

    Even though Pinterest is purely visual, it’s important to connect the virtual branding to your business’ physical brand. This means making sure your account displays address, physical location, links to other websites (company website, twitter, facebook), and information. Be sure to incorporate more than just your products, but also highlight tips, tidbits, "behind the scenes" snapshots of your company, and other related content. If you want to display a large amount of content, an interesting way to make it more user-friendly is to create an infographic, which have been very popular on Pinterest.

  5. Introduce members of your company

    To make a business-oriented Pinterest page more dynamic, try introducing members of your company or brand. This way, you can create a more personal interaction with users, encouraging feedback and traffic. If customers can see the inner workings of your company, they may feel more connected and loyal to your brand. Look for ways to pin photos of company events and actual production of your products. Feature interviews of users who liked your product or go with a monthly theme.

  6. Display coupon graphics or create competitions

    Promotional discounts are common on Pinterest. Using a coupon graphic for certain products or services is a great way to drive attention to your product or site. You can also include hashtags in the description to help users easily find your content in searches. Ask your followers to contribute with their own pins, including a unique hashtag (mentioning your brand) in return for discounts or a chance to win a prize. A company that recently ran a competition was Land’s End. The company encouraged participants to create pinboards with their favorite Lands’ End products to win a collection of Lands’ End products. The company linked this competition on their website and ended up being very successful.

  7. Use other social sites to feed Pinterest

    Your business may have many other networking sites, not just Pinterest. A way to gain greater visibility is to add a Pinterest logo with a link to your Pinterest in order to gain more followers. Sometimes a simple link through Tumblr, Facebook, Twitter, or company site can generate hundreds of new followers a day.

  8. Engage with followers & get feedback

    Create moments of engagement with your followers. You can do this effectively by participating in conversation: comment on a photo you like on another board, reply to feedback, and answer any questions. An option Pinterest encourages is allowing other contributors to pin on your pinboard. You can create a board just for your fan’s contributions to help spread the word about your products. In addition, fan involvement helps promote your brand across a wider audience.

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