In 2017, over a dozen big brands filed for Chapter 11 bankruptcy protection. They included Radio Shack, Payless Shoes, Gymboree, Aerosoles, Vitamin World, Toys ‘R Us, and clothing manufacturer, Vanity. In the past few years, even big auto manufacturers like GM have had to file bankruptcy. Sometimes this is done in order to restructure a corporation, but most often it is done simply because profits are way down in the business.
Why file bankruptcy?
For the individual and the business owner, bankruptcy is a good option if you’re in over your head and seemingly have no way out. You can often keep certain assets while eliminating overwhelming debt. Of course, the optimum idea is to be so successful that you don’t even have to think about filing bankruptcy. This is always the goal for anyone who opens a new business. You want to supply a need in your community, while earning good money and providing jobs for local residents. Sometimes our plans work out and sometimes they don’t.
When you read that big companies and trusted brands are forced to file bankruptcy, it can prevent you from focusing on our own business plans and continuing to thrive. It’s tough to stay committed to the job at hand after reading the doom and gloom financial reports we hear each day. And that’s where many business owners slip up. They think that if GM and Toys ‘R Us can’t stay in business with their humongous advertising budgets, then how can the little guy make it?
Regardless of how GM is doing, the trick to thriving and surviving is simply to keep on doing what you do best. Provide an excellent product or service at a fair price. Treat your customers like they’re the most important people in the world.
Why companies fail
When we look back at the failures of some of the biggest bankruptcies in history, we often find that funds were being mismanaged at a very high level. These big companies often treated their customers poorly. They felt that they no longer had to provide friendly, personalized customer service. After all, if you have millions of customers worldwide, then what does it matter if you anger a few people here and there?
Recently, Starbucks was in the news due to the manager calling the police on two black patrons who refused to buy anything. They said they were waiting on a friend. In spite of this, the Starbucks’ CEO says that sales are not down. But sometimes it can take months or years to see the real fallout of a situation like this. The public’s view of Starbucks has been tainted and it may take millions of dollars in new ads and PR to correct this. Sometimes moves like this can be fatal for a business. It’s much easier to simply avoid this type of blunder. The cost to repair a damaged reputation can be high.
Running a successful business
This should be a life-lesson for all business owners. Treat every customer right. If someone complains, deal with it correctly. Every company today needs a complaint department that handles angry customers wisely. There’s just too much competition today to take the risk of infuriating a group because your new ads were insensitive to moms, the elderly, Muslims or some group. Each person is a valuable customer and word of mouth is still the best form of advertising.
Regardless of how the stock market is doing or what’s going on with other companies in your area, remember your fundamental reasons for starting your business. Stay in touch with customers and what they’re saying. Give people value for the dollars they spend with your company. Avoid running up large credit card expenses. And lastly, don’t go into debt for machinery, tools, a new building, etc. that your company can’t really afford.
Remember this: in American business, it has always been the risk-takers and those who could see beyond the ordinary, those with vision, who have been the most successful entrepreneurs. Those are the leaders, the ones who make it through the long, dark tunnel, and come out a little wiser and more successful on the other side.
Americans have jointly learned some very tough lessons that hopefully will stay with us for many years to come. One of the great things about America is its ability to rebound in any situation or circumstance. Other nations might not be able to get up and walk forward after a great economic blow, but America always rises again.