Many very successful large companies have, in their early days, nearly gone bust.
1. FedEx
The parcel company FedEx was founded by Frederick Smith. Within two years of starting up FedEX it was nearly bust with just $5,000 in the bank, which wasn’t enough to fuel the company’s planes.
Smith went to Las Vegas and gambled his companies last $5,000. Fortunately, he won $27,000 which was enough to buy fuel for another week’s flying. He then started a direct mail operation and turned the company around.
2. Airbnb
In 2009 Airbnb was close to going bust with weekly revenues of about $200. The managers of the company noticed that many room photos on the Airbnb site were not very good. Despite no firm data to support their theory that bad photography was negatively affecting their business, the three-man management team flew to New York with an expensive high-resolution camera. They took professional pictures of Airbnb rooms and their weekly revenue doubled to $400.
Up until that time, Airbnb relied on the computer code on their website to improve their business. Taking photographs was the moment they realised that not all business improvements were down to a better-coded website.
3. Apple
In 1985, Steve Jobs was fired by Apple. During the next 12 years, Apple operated at a loss and almost went bankrupt. Jobs was re-hired in 1997 and his team created the iMac. Apple returned to profitability and is now one of the richest companies in the world.
4. Tesla
In 2008, Elton Musk owned both Tesla and SpaceX. SpaceX had little revenue and Tesla motors was losing about £4 million a month. Musk had applied for a lucrative SpaceX with NASA. He convinced his investors that the lucrative contract was definite even though it wasn’t, and they lent him the $20 million needed to save Tesla from bankruptcy.
5. Evernote
In 2008, Phil Libin the founder of the note taking software company Evernote decided to close down his loss-making business. After making the decision and just before going to bed, Libin opened an email from a Swedish man wanting to invest in Evernote. His £50,000 investment saved what became a £1 billion company.
These stories illustrate that keeping a company afloat can be down to foresight, learning from mistakes business acumen – or plain good luck. It also helps to use a management accountants service to monitor and protect the company cash flow.