It seems that almost everyone these days wants to start a business. People are full of "million-dollar" ideas that they hope will get them rich or famous, or maybe even both. However, sometimes it doesn't really work out and you're left with way less than you started out with.
Reddit user Devvint_ asked people, "What is the worst business decision you've ever seen?" and surprisingly, a lot of them delivered interesting stories. Do you have any of your own to share? Feel free to do so in the comment section below!
#1
In my hometown there was an independent fast food and homemade ice cream place, long established and run by close friends. It was a goldmine. They decided to sell and retire. New owners immediately changed everything. Painted it a wild color, removed some attractions on the grounds, changed the 60 year old menu and switched to commercially made ice cream. They lasted 8 months.
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180points
We got an interview with Ulrike Schaede, a professor of Japanese business at the University of California, San Diego. She gave us some amazing answers about business and how to run one. Firstly, we asked what the worst business decision she's ever seen or heard of was: "Any decision that destroys a company is bad, especially if it is the result of a gamble (i.e., the risks were known at the time of decision). Toshiba invested in nuclear power only because their main domestic competitor did, without the ability of running a thorough due diligence of what they were buying.
Another version of this is not doing what is required to save the company's future. For example, Blockbuster rejected overtures from Netflix to merge. They failed to see that Netflix had the future figured out, and they hadn't. Barnes & Noble could have gone online much sooner and launched a 'click & mortar' play. Kodak should have moved to becoming a materials and digital imaging company much sooner (like their competitor Fujifilm did, successfully). And, my favorite: Sears, the largest catalog and retailer in the U.S. and the world in its day, failing to put the catalog online early."
#2
A developer my dad worked with sold off a beautiful piece of land next to a river in a very desirable area, he sold it to another developer. The new developer cut down every tree on the 6 acre site, as he said, "he wanted to see what he had". The land then started to slide into the river, rendering it worthless *and* ugly.
156points
#3
I used to work for a company that was bleeding money. In order to try and save money, they decided to stop honoring returns/refunds, but still advertised that they did.
Whenever someone would ask for a refund, you were supposed to tell the person that it would be processed in the next 6-8 weeks, then get them off the phone.
6-8 weeks later, when they ask where their money is, you were supposed to apologize and say their paperwork got put in the wrong stack, and that it would be put in the correct stack and would then be processed in the next 6-8 weeks.
If they complained about the length of time, you were supposed to tell them you can ask your supervisor to expedite it, and they should see it in 4-6 weeks instead.
If they threatened legal action after months and months, you were supposed to tell them to contact the company legal department ( we didn't have a company legal department) and then hang up on them. Then, make a note in their account. No one should field calls from that account further.
More than half the call center quit in a single week in protest of this decision.
Company collapsed in on itself within a few months.
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152points
Ulrike Schaede also gave some insight about the main mistakes new business owners make: "To be so much in love with their business idea that they don't see – or hear – possible reasons why it may not work out. This is particularly true for tech inventors, who are so convinced that their technology is the best that they forget that the consumers will have to be sold on the new value proposition. But it applies to non-disruptive businesses as well, like restaurants or coffee shops."
#4
I never understand ads that start off insulting me. There’s one I see on YouTube all the time that starts with “your skin care routine sucks” and goes on to try bullying me into buying their product.... like that’s the best way to get me to avoid your business at all costs even if it might be a good product
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146points
#5
There was a shopping plaza near me with a fairly large gift store. Not a gift shop in the museum sense, basically like a Hallmark store but independent. It wasn’t exactly bustling, but they apparently did solid business and a lot of people in the community really appreciated having it there as a place to buy gifts and wrapping paper and such. The owners of the shopping plaza raise rents to the point that the shop goes out of business. The reason this was stupid is that the store front sat vacant for like 15 entire years. Seriously, this place closed when I was a child and I’m now 27 and the vacancy was only taken over very recently. If their goal in raising the rent was to have a more profitable store move in to that space, they certainly failed and missed out on decades of rent as a result.
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142points
She also shared some important tips: "To overcome the bias in overestimating the general perception of one's business concept, run all ideas and steps by a trusted, experienced person who is not invested in your business. Ask them to be brutally honest at all times. Then, listen to them, figure out what they are sensing, and shape your strategic responses to address their concerns."
#6
There’s a major ice cream place in my hometown. Big building, tourist attraction sort of thing. Then the owner decided to post up an “all hail trump” sign. And when I say sign, I mean a huge tarp on the front of the store that you could see across town. I live in a liberal minded town. Business immediately went down the shitter.
What was once a bustling store is dead empty on Saturdays.
EDIT: the sign was actually “In Trump we trust.” But both basically mean the same thing. Sign was still a huge a*s tarp.
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132points
#7
Cafe I work for decided it wanted to fire everyone except for the leads and the manager. Then told the manager they weren't paying her salary anymore AND she needed to take on more work. Assumed people would do it because they "love their jobs"
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123points
Ulrike Schaede shared what the main problems with businesses these days are: "The necessity of speed, caused by the short-term tendencies of markets, has led to too many ideas that are half-cooked. The concept of 'lean startup' was very insightful and useful when it was first conceived some 15 years ago, as it introduced the 'good enough' concept to get companies going. But the pendulum has swung too far in the other direction. If a startup is too lean, it may not have the stamina and support network it takes to run the business marathon."
#8
Property management company I used to work for had a number of student properties and high-rises that were always a struggle to fill in the summer months when students went out of town.
Head office came up with an offer that anyone who signed for two years got the four summer months at 50% off. Sounds like a good deal, 50% rent is much better than zero. We signed tons of students.
However the lease templates that head office sent over showed the reduced rent rate on the lease rather than just adding the discount as a separate addendum. I noticed this discrepancy and reported it - and was subsequently ignored.
Which meant the students were signing a legal document that guaranteed them 50% rent for two years.
The company lost hundreds of thousands in revenue.
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121points
#9
My late great uncle started a fish and chips restaurant. He had his own unique recipe for the fish and it was very popular. Businessmen had offered him thousands in cash for it over the years, but he always declined. After about 40 or so years, he decided to retire and hand the business over to an ambitious recent college grad. He offered to give her the recipe and even volunteer his services for a bit while she got comfortable in her new role as owner. She declined both and within a year, she was forced to sell the restaurant after coming close to declaring bankruptcy. My great uncle died and took the recipe with him to his grave
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120points
#10
I worked for a video store during the time Finding Nemo came out on DVD. The video store I worked for got a huge fishtank put inside. It was so big they had to shrink the game rental section. The tank had clown fish in it. The tank was also locked and we couldn't feed the fish or clean it. This was supposed to be done by someone who I never saw come in. So the tank ended up filled with a bunch of dead Nemos in a nasty as f**k tank. Needless to say parents were very unhappy about it. The local paper did a small article about it too which didn't help an already dying store. I have no idea what they thought an expensive as Hell fish tank would do for their business.
117points
#11
Take a help desk that has been consistently rated extremely well by its customers for their first-call-resolve, attitude, and helpfulness; outsource it to a company that's been rated towards the bottom of the list for over a decade because it costs less than the salaries/benefits of your former in house help desk. Then complain when your first-call-resolve drops through the floor and your customer satisfaction is at an all time low.
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110points
#12
Small company I used to work for hired a guy who had been laid off from a previous job - let's call him Jeff. He had some business management experience, but the company's philosophy was "everyone starts at the bottom" (that alone is a terrible business practice, but not what I'm referring to). Eight months after Jeff is hired, the office manager walks out due to a disagreement with the owner. Owner tasks Jeff with doing the old manager's job and tells him "if you do well enough, we'll give you the job permanently." Jeff absolutely killed it; he handled problematic customers with patience, delegated tasks to people he knew could handle them bets, and implemented a few systems that made the business run more smoothly. The holidays roll around and the owners hire a new person from out of state - we'll call her Janice. Janice has a similar story to Jeff's; thought she had a steady job, got let go unexpectedly, needed anything that could pay the bills. Rather than start Janice from the bottom like they did with every other employee, they had her shadow Jeff in the event Jeff went on vacation or was hit by a truck. Makes sense, I guess. Again, Jeff rolled with it; Janice was pretty slow to learn anything and outright stated there were some parts of his job she would not do under any circumstances, but she'd do in a pinch.
I mentioned that they hired Janice around the holidays because the company always shut down the week between Christmas and New Year. The last working day before the shut down, the company had a small party, and while one of the two owners went with Janice to pick up the pizza, the other owner said "Jeff, you've done an awesome job this year and have been an asset to our company. Take the rest of the day off (after the party, of course), and when you come back in January we'll have a talk about your future here." Everyone was thinking "alright, cool! Jeff's gonna get promoted." Yeah, no. It took a few months for the truth to come out, but here's what happened: The owners decided that while Jeff was a fantastic manager, he didn't have the "face" they wanted for their business - they much preferred a slender blonde woman to be the first person their customers saw instead of the tall burly guy who looked like he just crawled out of the woods behind the place. So despite the fact that Jeff had practically carried the company for eight months, they gave Janice the promotion instead. When Jeff protested and said they had promised him the job, they claimed they never promised him anything and he "should be glad to even have a job in this economy." If that wasn't bad enough, here's where it gets worse: the "talk" the owners had with Jeff was "as a thanks for keeping us going, we're giving you a small raise and changing you from hourly to salary - so while you won't make overtime pay anymore, your paycheck should still match what you were making previously."
Naturally, the owners didn't tell everyone they'd screwed over their best employee - they just told anyone who asked that he turned down their offer and forced them to give it to Janice instead. When Jeff learned they were lying about what happened, he decided to (metaphorically) burn the place down. When he was training Janice, he would save her before she made a big mistake and even though quality control wasn't ever his job, he was really good about catching errors before they went out the door. If Janice couldn't figure something out, he'd tell her he was busy (which was usually true) and for her to get someone else. If she or the owners demanded he drop what he was doing to assist her, he'd do the minimum necessary and often make an offhand comment to the owners about her incapability to do the job unassisted.
After almost two months, Jeff got called into the office where the managers threatened to fire him if he didn't shape up - he asked them to point to what aspect of his job they were unhappy with, and everything they replied was met with "that was my task when I was the acting manager, now that you have a manager, that is no longer my responsibility." They tried to counter that he was the *assistant* manager, but he responded that his official title in their system was still "expert" (i.e. regular employee) and that he hadn't agreed to accept a position as an assistant. They tried to say "fine, you're an assistant manager now", but he declined the position; they replied "you can't refuse this, we're making you the assistant manager". Jeff shot back with "Oh? Well according to the lie you told everyone in the shop, I 'declined' the position you gave Janice. Now you want to tell me I can't refuse a promotion when it suits you? If you do this, I will do two things: I will quit right now, on the spot, and on my way out the door I will tell everyone in the shop every detail about how you stabbed me in the back." The fact you're reading this now should tell you what choice the owners made.
What's funny about this is that Jeff was actually disappointed to quit the way he did - he had a new job lined up and was starting the very next Monday, but he was hoping to drive the owners to the point they tried to pull the "you should feel lucky to have a job" line again. Anyway, Jeff enjoyed a week of unscheduled time off and went on to greater things, and the company realized just how much they relied on him. Janice quit about three weeks later because she "couldn't handle the stress", and the owners actually fired me for putting in my 2 weeks notice when I got a job offer somewhere else. Somehow the owners kept the place going for about two more years before folding, although I hear they moved elsewhere in the state and tried again.
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100points
#13
There is a storefront in my city that opened mid pandemic. They are a candy store. Simple enough right? They advertise as couture, luxury candy. They have a store in the most high traffic area of the city and therefore pay astounding rental fees.
All they have is peach rings and gummy worms repackaged into glass jars with twist off lids.
Whoever decided to open this business must have no family who care enough about them to take them aside and be like "Aunt Lynda, this is a f****n stupid idea"
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97points
#14
I would go with Mao's great leap forward. Taking millions of farmers away from farming so they can make s****y steel from any scrap metal they can find and 20-40 million people die in the resulting famine and China ends up with lower annual steel production.
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94points
#15
There was a Tex-Mex place I loved in Fairbanks, Alaska. The food wasn't GREAT, but it was consistent, and the prices were fair.
Well, a new owner came in, and they decided to revamp it into a fine dining steak house. $30 was pretty much the lowest cost you could get for an item, and this was in a neighborhood that had a substantial crime rate and was right across the street from the bikini barista and the marijuana dispensary.
I stopped going, and they went under shortly thereafter. I walked in once before the place closed down, and it was dreary and empty and they had tried to bring some of the classics back to the menu, but it was far too late by then.
You were too good for this world, Los Amigos.
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84points
#16
This one involves my Dad. Back in the '80s he decided he wanted to teach people how to use Lotus 123, Excel, MS Word, etc. So he bought a bunch of computers for a classroom, and he wrote interactive learning programs, and printed out manuals and such. Even without advertising, he had people asking to join his class BUT ... he was never quite ready. This Lotus 123 program could use more work. He wasn't ready for a class, this MS Word tutorial isn't quite done. The perfectionist in him wouldn't let him expose the less than perfect programs/class to people ... just yet. He turned down paying customers for fear that it wasn't just perfect. He had taken a loan out from a friend to finance this, but never made a dime. He paid the loan back by selling our cottage, something he regrets to this day. And why? Because he was afraid to be flawed.
That taught me a lesson though, as the old saying goes "Perfect is the enemy of done". He could easily have made money and taught his classes, refining the programs to student feedback. He could have covered deficiencies by teaching in person. He was afraid it wasn't perfect, so it was never done. We don't talk about it, or the cottage that we built together (we had the foundation and structure built by pros, then the whole family pitched in to build the interior when we were teens).
It saddens me more because it was what he wanted to do, and he went for it ... but not quite.
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84points
#17
Around last year this time of year, I know someone in their early 50's that sold all of their investments (at a significant dip from the highs) and decided to start producing and selling hand sanitizer in little bottles out of their garage. Seeing it as a big opportunity with the virus.
They spent everything on the bottles, labels, plastic drums full of sanitizer (at a huge markup), hiring locals people to fill the bottles and put the labels on, and then a website. By the time they had inventory, they realized that they couldn't compete on price with places like Walmart or other big box stores that had finally caught up to the shortages by mid-summer. They also didn't realize that selling on Amazon was gated for that category so you had no chance of selling through there as a new seller. So now they basically have a garage full of old hand sanitizer, and no savings.
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82points
#18
Circuit City was pretty stupid. When the recession hit, they decided to stop selling appliances and instead focus on DVDs and televisions and such. (Appliances are known as being a recession proof item. People always need refrigerators and microwaves. They don't need DVDs.) They also wanted to cut down on labor costs, so they fired a lot of managers and assistant managers, and just left a lot of entry level employees because they were cheaper to pay. Well, entry level employees don't really know how to fully run a store, so pretty much every Circuit City became dogshit.
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80points
#19
I worked for a design/printing place for years, and the owner went from amazing idea to stupid idea on a regular basis. don't get me wrong - guy is a brilliant designer, totally took advantage of new tech every chance he could and made it work.
But - he was cheap and greedy, so, ruined what would have been lucrative long term business relationships.
So - we did this huge order of promo supplies for a fairly big on-line casino. huge, for him. about a 20k order, with good margins, and the chance at long term work with this company.
While it was being picked up, on the spur of the moment, he decides to pad the bill by about 200 bucks. the guy picking it up was the son of the casino owner, and literally watched the boss do this while I stood at teh till.
The customer looks at me, smiles, and pays the bill. With a huge wad of cash. And says "I know it's not your fault, but - my family is very wealthy. We didn't get that way letting people rip us off. Tell the boss over in the corner he just f****d himself out of a lot of money, because we loved the work." in a voice meant to carry.
Edit to clarify who was paying. And padding means he increased the bill over what he had quoted the job to cost.
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74points
#20
A radio station i used to listen to recently changed their format from 80% music, 20% talk show to 100% talk show. Then they were like “oh you can still listen to the music but it’s only going to be on our app.”
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71points