With many individuals out starting their own businesses, all too often they feel as if they will have a very hard time providing a product or service that is worthwhile. Afterall, they look on television and see a variety of companies that are raking in millions of dollars in a fiscal year. How can they really compete? While the focus of this article is not providing tips for competition, it is intended to be humerous and show you the business mistakes of major corporations in our world. The most important aspect here is this: we are all human, and we all make mistakes. While there may certainly be individual scenarios wherein a company loses a significant amount of money, I am going to attempt to hone in and figure out what exactly major companies do time and time again which ultimately costs them a lot of money. Maybe you can keep these in mind as you begin laying out your own business plan, and hopefully learn to avoid these trappings and flourish as a company. With that, I present to you the 7 Most Common Business Mistakes of Forbes Top 500 Companies.
1. Listening to Customers Costs MILLIONS
Here is something you don't hear everyday: when Wal-Mart decided to listen to it's customers (who had responded to a store survey), the action they took to reduce clutter in their store ultimately costed them an estimated $1.85 billion dollars. The shocking reality at play here is that businesses do not make money when they cater to their customers every interest, especially when those interests run counter to the interest of the company (which is, presumably, to make money). Consider this: If your customers desired you to lower all your prices so they only had to pay a dollar for a television, would this be a good business move? Probably not. Though it would certainly be a "nice" thing to do, it does not make any sense from a business standpoint. While the actions and motivation behind Wal-Mart's "Project Impact" in 2008 seemingly made a lot of sense on paper (and genuinely was a pretty nice thing for them to do), it ultimately proves that listening to customers is not always the best sales tactic.
Source: Daily Artifacts
2. Charging More Money for Services that Should Cost NOTHING (or very little)
As Forbes reported in October 2011, Bank of America began charging $5 dollar monthly fees for debit cardholders. I'm not sure I need to write much more, as when I originally heard about this on a major news network I honestly laughed to myself. But, as time progressed, I realized Bank of America was not playing what would have been the best practical joke in the history of banking. These fees are real, and it is projected that in the long run this act to recoup some of their losses, Bank of America will ultimately lose out big time. It is suggested that Bank of America's stock will plummit, and more importantly individuals who have accounts with Bank of America will frankly just get up and leave. Hopefully the consumers make the right decision and leave this major banking corporation behind, as their greed has cost taxpayers time and time again; and their insistance on charging even more money for a service (owning a bank card) that should quite literally be a free one. At the end of the day, the most common business mistake many companies make are those made out of pure greed. Bank of America stands as a case and point of this.
3. Ignoring Common Sense and Ecological Concerns Costs MONEY
Many people are familiar with the BP (British Petrolium) oil spill that occurred in the Gulf of Mexico in 2010. One can easily fathom how money was so easily lost while oil pumped out of the ocean floor and into the ocean. While so much focus has been placed on BP with regards to their poor safety standards on their oil rigs (amongst other things), I found it amusing that so many other similar (though smaller scale) incidence have occurred throughout the years. For example, ExxonMobil (currently ranked #3 on Forbes Super 500 companies list) had an incident that took place in Billings, Montana wherein one of their pipe lines burst sending oil into the Yellowstone River. As I see it, oil is no joke, and once it gets into the water stream by way of a river; it will run downstream and dump into other tributaries and major rivers and ultimately lead into the ocean. While I am not against oil digging, there undoubtedly need to be more precautions taken when drilling is occuring. As it is reported, Exxon had fair warning prior to the rupture in it's oil pipe. They did not heed this warning, and ultimately is costed them a fair amount of money. More important, the amount of money companies like Exxon and BP have to spend on public relations, environmental clean up, and so forth far exceeds the amount of money they would be earning from drilling. A word of advice: use caution if your business is involved with the environment in any significant way.
Source: USA Today
4. Offending Customers is Easy When Your Product Name Sends People to a PORN SITE
The internet can be a funny thing when it comes to naming new products and promoting those products as well. As I learned from reading this blog, Mars Incorporated (the company behind a variety of candies including M&M's) was introducing a new product named the Fling chocolate bar. It was directed towards woman and was meant to be a dieting snack, as it only contained 85 calories. It seems harmless enough on the surface, and unlike other mistakes that have been committed by major companies; Mars Inc. does not seem like they intentionally were looking to offend their customer base. It appears that they were purely ignorant of the fact that a porn website goes by the same name of their new product: Fling. People would end up at a pornographic, adult dating site when they typed Fling into the address bar. Where Mars intended for them to go was really flingchocolate.com. This may seem like a small mistake, and one that would not cost a whole lot of money; but in reality something as simple as needing to pay for public relations can easily become a heavy burden; especially when the wrong link becomes associated with what Mars Incorporated really meant. It was like they were saying, "To lose weight you have to go on this adult dating website." You can just imagine the many thoughts that stem from there with regards to sexism, women's rights, and so forth. It is very much human nature to blow things out of proportion. This could have all been avoided if Mars was on top of their game and did a little bit more research prior to shipping out their new product.
I would definitely have to say that ignorance and poor research often leads to some of the most common business mistakes, whether they are made by small businesses or major corporations as those found within the Forbes Top 500 companies. If you're a fan of M&M candies, might I suggest checking out my article titled The 10 Best M&M Commercials Throughout the Years.
5. Having TAXPAYERS Pick Up the Cost of ILLEGAL Activity Costs BILLIONS
This news story should ring a bell to the minds of many, as it is fairly recent. Major mortgage firms Fannie Mae and Freddie Mac have essentially buried themselves in illegal activities and public relations problems that could ultimately put them under, if the United States governments would actually allow them to go bankrupt and fold to economic pressure. In a January 2011 article by the Washington Examiner, it was noted that these companies engaged in fraudulent behaviors. Most notable to taxpayers in the USA (including myself) is the fact that the US government then bailed both of these companies out to the tune of $148 to $363 billion. Aside from this being a major economic and ethical problem (not to mention it should be illegal for the US government to "take over" private businesses, however giving into legitimate pressure from the men of power behind these firms; the government itself folded to the wishes of these corporations), Fannie Mae and Freddie Mac continue to operate very poorly. Literally stealing money from taxpayers to pay for private business costs does not go over well with said taxpayers, and boycots of these companies have consistently occurred since the government bailout. It is only a matter of time before the economy takes these companies completely under. For these corporations, karma is truly catching up as they continue to operate at million dollar losses each quarter of the fiscal year.
6. Buying Domain Names Without Research Costs MILLIONS of Dollars
Here is yet another shining example of when making purchases should include a significant amount of research prior to placing your order. Apparently, Toys 'R' Us (the major toy store chain) made a very common business mistake that involves ignorance of how the internet works and making blind purchases. In all of our personal lives, we have probably wasted money on things we didn't really need, or that we thought we needed but we really didn't. Of course, a majority of these things probably do not run at a cost of $5.1 million dollars. Toys 'R' Us purchased the domain name Toys.com. It seems simple enough, and to the untrained eye this seems like an excellent investment. The problem came later when Toys 'R' Us found out that this domain name was no longer indexed by Google, which means that the address Toys.com would not show up in search results. This is a significant problem. Now Toys 'R' Us owns this link, but it is ultimately useless for directing new search engine traffic to it. This could have easily been avoided if they had hired an SEO consultant, who could have told them not to buy in about 5 minutes of research.
7. Overhyping Products that Don't Live Up to the Hype COSTS MONEY
This is a very common dilemma many businesses, both young and old, face with regards to marketing their products. If you are constantly bombarding people with flashy imagery and great advertisements, it will definitely make people interested in making a purchase; but if that purchase does not satisfy their needs, it will lead to an uproar. This is something I experienced first hand after purchasing the relatively new video game The Elder Scrolls V: Skyrim. Initially, I absolutely loved the game; however within a few days it started having a ridiculous amount of lag and continues to freeze on me to the point where it is unplayable until a fix is released. It is a killjoy for me, as I purchased the game (even before it was released out of sheer excitement), and it has ultimately failed me because it is virtually unplayable at the moment. Of course, the company Bethesda isn't one of the Forbes Top 500 companies; however this mistake is just a personal anecdote I thought I would throw out there.
In addition to this, with keeping to the focus on these major corporation's common business mistakes, consider Amazon with their recently released Kindle Fire. It is being promoted as a major competitor to Apple's iPad, and at a significantly lower price. But, as customers are finding out, this lower cost comes at a literal price. People are complaining about the touch screen response time, the web browser, privacy settings, and even the lack of external volume controls. While I still think this is a pretty great product all things considered (especially comparing prices between the Kindle Fire and Apple's current iPad 2), it still has major flaws that will need to be fixed with software patches or updated in the next version. While the latter point is often an investment made by companies, the former one (software fixes) is one that costs a significant amount of money because of the required manpower. Not to mention, public relations is an issue Amazon has to deal with yet again because the product has certainly not lived up to its expectations.
I hope you have enjoyed this pretty involved article detailing the 7 most common business mistakes of Forbes Top 500 companies. If you like it, please let me know. Leave a comment or shoot me a message! I also write on a lot of similar topics these days as well, so check out my other articles here on InfoBarrel too.