The decline and fall of a successful business

 

Shut up shop?

Sun roofs

Once upon a time there was an entrepreneur (except they weren’t called entrepreneurs in those days) who had a brilliant idea for a business model. He put it into action, offering a type of franchise and took lots of money up front with promises of good and even very large income.

The money just rolled in, year after year. Those were heady days in the eighties bubble with everyone making their mark in fashion with those shoulder pads, and having sun roofs cut into their runabout cars. The profits of the franchisees were not so huge, but in pre-internet days it was easy to keep from prospective new recruits that life wasn’t quite so rosy within the organisation as they might have been led to believe.

The web they wove

Then, gradually at first, the internet enabled people to talk to each other. Those who had bought in found that they were not alone in not making the large amounts of money they had been promised. After a while, everybody was talking and those who might have been potential recruits in the wider marketplace found that the road within the organisation was not paved with gold.

The sign-up income of the erstwhile entrepreneur dried up. He still many of his recruited members, but perhaps had lost the energy to plan. He hadn’t counted on everyone being able to communicate and be so well-informed. In a foolish moment he had decided to do away with the basic annual subscription and without new recruits buying their way in, he had no income.

He decided to sell, but unsurprisingly with no income coming in, there were no takers. You cannot sell a model that doesn’t work.

The Empire crumbles

Our owner had never listened to advice. He had always known best in the past. His was one of those autocracy businesses, with him at the top of the pyramid.

So the business started to crumble away. The owner tried to reintroduce a subscription to keep the basic infrastructure in place to allow the members to communicate with each other. Many of them laughed at this, having seen little return on their investment even in the organisation’s heyday.

Necessity is the mother of invention

What was a great business model 25 years ago might well be a poor one in the age of the internet. There are other ways and, yes, very many ways of making money if we are adaptable.

That is the point. We must be adaptable. We need to change. We need to use the new tools to the best of our ability.

What will become of our autocrat? He will probably retire and is handing over the remnants of his business to his son who is far more experienced in information technology.

What do we take from this? The answer is that the business environment is always changing, and even if we think we know best, we must seek advice as soon as we have a problem we cannot handle. You know when you need help, don’t you?

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