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Top 10 Business Failures in History

Written by Top 100 Arena on 2012-07-19
Studies showed that 6 out of 10 businesses fail within three years, while 55 will fail in first five years. At the end of year tenth, we will only see 29 of the businesses founded a decade ago. While failures in business are not strange, there are some businesses that are bound to fail since the inception. And there are businesses that closed shop because of huge scandals, frauds and scams. In this list, we are not interested in any quiet or normal failures. We will be listing those that went under with loud cracks.

10 Fashion Cafe

Item 10

Have you ever thought of size 0 models going nom nom nom on burgers and fries? No? Then how about associating those supermodels with a restaurant chain serving burgers and chips? We dont know about you now, but the image of a spoon of baked red beans with two slices of tomato on a plate comes to our mind whenever we thought about Fashion Cafe. Endorsed and advertised by catwalk supermodels such as Naomi Campbell and Claudia Schiffer, the strange association of gargantuan burgers and skinny models didnt work. The brain behind Fashion Cafe, famed restaurateur Tommaso Buti, sold the business four times over and was arrested in 2000 for frauds, money laundering and other financial irregularities. More info on Wikipedia

9 Hoovers Flights

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Giveaway campaigns to boost sales work and thats why many marketers are using it to date. But then they are also capable of driving your business down if you are giving away too much. This is the case with Hoover in 1992. It gave away free flights within Europe for purchases over £100. Then it expanded the offer to include transatlantic flights. The offer was really good that people flocked to Hoovers to buy its products, and dealing with over 200,000 applicants for free flights made Hoover lost over £50m. What was left of the company was later sold to an Italian firm and thats the end of Hoovers story. More info

8 The Edsel

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You might think that Ford isnt really synonymous with failures. But in 1958, Ford introduced a new vehicle named Edsel which immediately flopped. Initially introduced as a futuristic, experimental car, it was a total failure by anyones standards. In November 1959, Ford finally killed the Edsel and by then they had lost an estimated $250 million, which is roughly equivalent to $2 billion today. Fords brand name might not be associated with business failure, but the Edsel is totally a huge fail. More info

7 Flooz.com

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If the image of Whoopi Goldberg comes to your mind when you heard Flooz, you probably already know about this business. Flooz.com managed to blow through $50 million dollars by trying to follow their assumption that Internet users wont want to use their credit cards online to spend money. Instead, they introduced a solution that utilize points, much similar to frequent flier miles or a supermarket reward points. As novel as the idea seems, it went poof since people were actually just as happy as they can be to use credit cards when eCommerce took off. More info on Wikipedia

6 Betamax

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We grew up watching VHS tapes. But did you know that Sony launched a competing product in 1975? If you were already a teenager in 1975, you might remember Betamax, which was over-expensive, complicated, bulky, ugly and horribly marketed product. Whats worst? Its limited capacity compared to VHS tapes. In the early stage which is vital for adoption and market reach, Betamax tapes could only last for 60 minutes while VHS tapes could do for two hours on standard play. If you think thats not too shabby, answer this question: how many Hollywood movies do you actually know that last only an hour? More info on Wikipedia

5 Ratners

Item 5

There is a catch-phrase in business world called doing a Ratner when business people get something so wrong. The term came from Gerald Ratner, former CEO of Ratners jewellers. He gave an excellent speech that drove down his company and devalued it for just about £500m in an instant. Did he endorse genocides or building WMDs? No, he joked about the cheapness of his companys products, describing total crap to a £4.95 Ratners decanter and cheaper than a prawn sandwidch from Marks & Spencer to Ratners 99p earrings. Granted, the company was really famous and popular at that time, but the CEO himself said his products were absolutely crap so it instantly gave bad publicity to the company and the products totally lost their glamour and appeal. The share prices went south together with sales and the company collapsed. More info on Wikipedia

4 DeLorean

Item 4

If you are wondering Why the heck the car from Back To The Future is in this list?, you might want to hold the thought. Wait, it is exactly the same car we saw in the geek-classic Back To The Future. DeLorean was overpriced, utterly expensive to build and slow coupé that only sold for 8,900 cars. The car was futuristic, with stainless steel body, sleek lines and gull-wing doors. In 1983, DeLorean was arrested for drug trafficking and although he was eventually acquitted, he never gained back any investors trust. More info

3 Tucker Automobiles

Item 3

As lovers of spectacular automobiles, we find it hard to put Tucker in this list, but then a failure is a failure. Tucker Automobile was in business for only one year (1947 - 1948) and produced a grand total of 51 cars. The problem started when Tucker offered its customers the option to buy accessories before their cars were built. SEC accused Tucker Automobile for fraud and due to pressure on government from Big Threes, Tucker Automobiles went under just after a year. Out of original 51 cars, only 4 no longer exist. Thats your clue for how actually awesome the cars are. More info on Wikipedia

2 Woolworths

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If you are a British, you definitely know Woolworths. Actually, you dont have to be a British to know this company. Woolworths actually had a great brand name. From the success of Beatles to Madonna, Woolworths was a critical player in music industry in the entire U.K during the 1950s and 60s. As a brand, it was even bigger than Virgin but now its gone. Its hard to pinpoint just one reason for its collapse. Bad management definitely played a major role, and the recession was also another huge contributing factor to the fall of Woolworths. Then other rising supermarkets and eCommerce also took a big slice of market share, and Woolworths management was slow to respond or do anything to preserve the brands legacy. When all competitors were trying and doing unorthodox marketing campaigns, Woolworths was still sticking to same old things. Its actually not very surprising that such a great brand went under. More info on Wikipedia

1 Commodore Computers

Item 1

Back in the early years of 1980s (1983 to 1986), IBM, Apple, and Atari only had combined market share of 50 and were actually sweating in fear of their major competitor - Commodore Computers. Commodore was selling its flagship product Commodore 64 at 2 million units a year and holding 50 of the market. Then the company tried to release a successor named Commodore plus/4, a faster version with a color screen. Unfortunately, it backfired and since the new model wasnt compatible with well-loved C64, the company just alienated the original customers. Commodore even tried to push the new model by announcing that they would stop shipping C64 in 1995. The outcome? The company went bankrupt in 1994. More info

Failure is inevitable in business. In hindsight, most of those mistakes could be avoided. But then, hindsight is always 20/20. Businesses fail due to a number of reasons, but we believe that the ten contenders in this list are among the biggest business failures in the recent history.

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