In an ever-changing world with things getting tougher every day, especially regarding employment, the tough are on the move. Many people realize the need of looking for other avenues of earning a living, other than waiting for the employment opportunities that are getting scarcer. Many people are taking up entrepreneurship. Even though, for others it may be for a different reason (passion, hobby, making use of free time or even maintaining the family legacy), most upcoming entrepreneurs just eke a living (Jennings, 1997). This essay highlights essential dos and don’ts in the world of business and is not only beneficial to entrepreneurs but to managers, parents and leaders. In general, it is vital for the whole society, as business is slowly but surely finding its place in today’s world and may just be the solution for tomorrow’s problems. The essay discusses a case study of business failure, lessons for aspiring entrepreneurs, and the way forward after a failed entrepreneurial venture.
The Rise and Fall of Boo.com
Three entrepreneurs, Patrik Hedelin, Ernst Malmsten and Kajsa Leander in 1988, founded Boo.com. It was an online marketing business, which marketed trendy clothes and apparel and was also connected to sports. At the time, this was a brilliant business idea, bearing in mind the number of people who were able to access the internet and the zeal with which people took to modernity, for it was an E-commerce venture. On top of that, the company’s three founders had invaluable experience, not only in online business but also in the publishing and marketing business. Two of them were the founders of the online business bokus.com, which they sold later on and used the capital together with investor funding to start Boo.com. The future looked convincingly conquerable by and far with this team and the business idea. However, nothing had prepared them for the events that would unfold in the subsequent twelve months after the launch of the business.
The business had poor competition since the venture the developers had indulged in was more of a revelation in the market at the time. Most of the businesses in line with the idea of fashion and sports mostly passed newspapers, magazines and other media (Jennings, 1997). For an industry, valued over sixty billion dollars, the entrepreneurs figured that they had much hope in launching it even if it meant tapping from just a section of the market. Through tailoring, the business appealed to the young and fashion-conscious, possibly well to do too, as the products they offered did not come cheap by any standards. Looking back, the mission and vision of the company is still somewhat far-fetched, especially considering the manner in which the business ended. Its mission and vision was to be the first global business that provided an avenue of conducting transactions, involving trendy wear online. This is where the rain started beating the company. The founders had been too ambitious in their forecasts and their market base. With its headquarters in London, the company opened many branches in America, Germany, Sweden, Finland, France and other countries. All these happened before its launch in 1999. The company closed its store in 2000, less than twelve months after its launch.
Reason for Failure
Entrepreneurship is a skill learned and perfected through experience and is not a birthright (Goltz, 2011). Even with a more or less experienced management team, the sail was not smooth for Boo.com. One of management’s most outstanding errors was being over-ambitious. With a good business idea, the management knew it was only a matter of time before they took the world by storm. What they did not understand is that growth of the business is coming through nurturing and time (Head, 2003). Even though, expansion is an essential factor in the growth of a business, it was an overriding factor, and it clouded the judgment of the management, which made it a priority. The management undertook an unrealistic plan to open branches across Europe and America without letting the business settle in the market. This “over-expansion plan” came with consequences as the business closed before it was even a year old. The other mistake was the speed of response to the customers’ complaints. Being a new venture in the market, many preparations, in terms of research, were necessary. Technologically, particularly, the business had to be prepared as most of its transactions were online. The business started on a slow note with many customers complaining at the speed of accessing their products. A number of customers complained that it took unnecessarily long to load the website page. This, in essence made the company lose a number of clients. Solving the problem could not prevent the company from falling.
Lack of clear visionary plans also led to the fall of Boo.com. In one instance, when an analyst was interviewing the management team, the team was unable to give clear answers. The rate of turnover, in terms of the number of clients they expected, and how much it would cost them to acquire customers, was important. The team was unable to give clear and precise answers. The analyst bluntly told them that they would fail sooner rather than later. Indeed, the predictions of the analyst came true. The management had not laid down clear ways by which they would attract, build and thereafter maintain loyalty in their client base. The ultimate blow to the company, however, came in the name of financial backing. In the wake of its closure, the chief executive officer, also one of the founders, Ernst Malmsten announced that if they did not raise twenty million dollars, they would have to close. They were not able to raise that amount within the stipulated time. The rest is history. This highlights the significance of financial stability in a business venture of any sort.
The idea of Boo.com was one of a kind, brilliant and revelatory. However, a business does not end at coming up with an idea. In fact, it is only one of the infant stages of a business (Head, 2003). The idea has to go beyond simply being a plan. The actualization process is what proved to be an uphill task for the management of Boo.com and this subsequently led to the failure of the business. Boo.com needed many necessary steps for the management had to keep their dream alive. Every entrepreneur at the onslaught of his/her business looks forward to the day when the business would flourish and make significant profits (Goltz, 2011). However, entrepreneurs need to be conscious not to let their dreams and ambitions come in the way of reality. In the case study, in this essay, the management should have started with a smaller, more localized venture. Afterwards, when the company had established itself and from the customers’ feedback and demand, they would have made the next step of expansion. Business expansion is a crucial step. On one hand, it may mean increased turnover for the business. On the other hand, it may mean an increase in the cost of operation (Jennings, 1997). It, therefore, requires a lot of thought, research and consultation. The expansion program in Boo.com came too soon, and the proprietors should have let the business gain grounds in the market before embarking on such an ambitious plan.
The backbone and, therefore, the reason why businesses remain in operation are the customers. This means that every business must go the extra mile to ensure their products and services are second to no other and desired by people. They have to ensure their customers' satisfaction with the products and services offered. Boo.com would have done itself an immense favor by looking into, and rectifying the customers’ grievances before they boiled over. They would have improved their technology to enable customers to access their products fast and easy. Even though, they gained grounds in this area by making improvements, their response was not quick enough, and it led to a number of customers feeling disgruntled. Businesses should strive to ensure they are customer-oriented and should handle concerns raised by customers with a keener interest. Entrepreneurs should also ensure that they have clear visionary plans that state their objectives, and how the objectives are to be achieved. Objectives set beforehand, act not only as a guiding factor to reaching the goals set, but also play a crucial role in post-analysis on the performance of the business. The management of Boo.com should have laid down concise objectives and devised how the objectives were achieved. This would have gone a long way in guiding the progress of the company.
Finally, the management should have adopted a strategic financial plan. A good financial plan, complete with a back-up source of funds in case things do not go according to plan is essential for the survival of a business. Lack of such plans was the ultimate blow to Boo.com. The entrepreneurial world is not a walk in the park and sometimes it requires the entrepreneurs to go out of their way to ensure their business ventures remain relevant. To do this, they need to make early plans in terms of finances, expertise, customer relations and long-term sustenance, in line with the ongoing changes in the current technological world.