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Learning From Others Failures
One of the biggest lessons that we can get from the late 1990s was the
implosion of many dot com companies. The technology of the Internet
made it possible for just about anyone with little business or
financial expertise to slap a website on as a "virtual company" and
claim they were in business.
With venture capitalists being very eager to get into the online
market, startup capital was very easy to come by during that time.
Unfortunately, many of the business plans were not well thought out.
Young entrepreneurs with technological savvy found it much more
difficult to parlay their knowledge into working marketable ventures
than they thought.
Ingenious ideas for ordering online and delivering groceries
(Webvan.com), buying pet food online (Pets.com), and getting scents
transmitted over the Internet (Digiscents.com) came and went almost
overnight. Often the virtual businesses never made a single penny in
profit before they had spent a vast amount of money loaned by angel
investors.
While there were some that took stock of how different the online
markets were to retail brick-and-mortar stores and were able to adapt
to the new environment (Amazon.com, eBay.com), many more were failing
secretly and were hoping that investors would buy them out in an IPO
(initial public offering) before they went bankrupt. For that reason,
they were soon to be known as dot cons or dot bombs.
As the viability of online business models began to be questioned, the
stock market took a dive and technology stocks plummeted. The result
was the bankruptcy of many dot com companies - but, not before a ton of
money was lost.
Everyone was questioning online businesses and the Internet (once the
darling of investors) and web ventures quickly turned from a smart
investment into a foolish investment overnight. Venture capital dried
up and now those that enter this area have much more difficulty
establishing credibility than before the dot com bust.
So, what went wrong? The dot coms
appeared to have it all worked out. They had some great business ideas.
They had solid venture capital. They had technically knowledgeable
people. What they didn't have were people with good business sense, how
to run an organization, and an understanding of the market needs.
Instead of meeting a market demand, they were creating products with no
research on how their product would be received by the public. They
assume a good product would sell just because it was advertised on the
Internet, even when there was no demand for it.
The lesson we can take from the dot com failures is that nothing makes
up for improper business training. We can be a genius technically. We
can have all the money in the world to get our product to the market.
We can even have a one of a kind, unique product.
However, if we have no idea how to run a business and manage the cash
flow and expenditures, we are doomed to fail due to lack of common
sense and business know-how. Learning how to run a business, whether it
is online or not, is a key factor to your success.
Find
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