Happy Halloween! Meet 3 ‘horror stories’ for entrepreneurs

In the world of entrepreneurship there is room for many mistakes , after all, how many new businesses survive their first five years of operation?

You may think that the most difficult thing is to position yourself, but everyone knows that maintaining yourself is even more complex than generating brand recognition and positioning.

Do you know these great business failures? Here we present you true corporate horror stories. Take note so it doesn’t happen to you!

1. SwissAir and its terrible financial strategy

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SwissAir was once the national airline of Switzerland and was such a stable company that it was often referred to as “the flying bank”. It was founded in 1931 and was one of the most important international firms in the world for more than 60 years. In the 1990s, the company began to make several money management mistakes and the decline began thereafter.

The financial strategy that caused them to decline was “The Hunter Strategy”, which consisted of buying small airlines around the world instead of focusing on obtaining commercial agreements with the largest (a process that they began to implement but failed), which plunged SwissAir in debt. Why? Because most of the airlines that SwissAir acquired were in trouble precisely because they were unable to compete with the better positioned companies.

Finally, SwissAir closed operations in 2002.

2. Pets.com and money-guzzling marketing

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Pets.com emerged in 1998 as a project through which you could order pet food and accessories online. Good idea, huh? However, the lack of market research led them to make many ill-informed assumptions. For example, they believed that everyone would want to buy online and even more importantly, they would know how.

With money in the bank and the excitement of entrepreneurship and optimism inside, Pets.com owners spent extraordinary amounts on communication marketing to develop the brand around a sock puppet that represented their mascot. What’s more, they opted to pay for a $ 1.2 million commercial at the SuperBowl, which was followed by intense online, print, television and radio advertising.

Brand recognition went through the roof. The site was a success and people started ordering. A month later, Pets.com was listed on the Wall Street Stock Exchange and raised more than $ 80 million for investment.

What was the fault? The demand was not even remotely close to what they expected. They found that brand recognition did generate interest but not enough desire to buy. The number of people buying was not enough and the orders were small.

Pets.com closed in 2000.

3. John DeLorean and his monstrous illicit businesses

^{Image: Wikimedia Commons.}

This entrepreneur started out with a brilliant career as an engineer at General Motors and soon founded his own company manufacturing futuristic automobiles.

What caused its downfall? Various crimes such as fraud, tax evasion, embezzlement, among others. His victims were the governments of the United States, Great Britain and Switzerland, as well as various Hollywood stars.

Star of Ford, Chrysler and GM, DeLorean decided to leave corporate life to start his own company. In 1973 he obtained the financing he needed to found his company (175 million dollars). It closed in 1982 when its association with drug trafficking was discovered in a recording. He confessed to the FBI that he planned to use the proceeds of his illicit businesses to finance his DeLorean Motor Company , which was on the brink of bankruptcy.

So you already know. Never trust yourself! And always pay close attention to every movement of your business. Remember that it is always better to thoroughly analyze each situation and try not to take unnecessary risks.