Literature Review 1

Literature Review: ‘How Six Companies Failed to Survive 2010’

by Eilene Zimmerman. New York Times (5^th Jan, 2011)

http://www.nytimes.com/2011/01/06/business/smallbusiness/06sbiz.html

This article sets out to inform people about the difficulties faced in setting up a new business.  It makes its readers aware of the problems small companies can encounter in their first year of opening, what went wrong and how its owners reflect back on the issues they faced. 

I came across this article on the New York Times website ( above) which gets more than 30 million hits a month. It was published in the business section of the ‘New York Times’ therefore its target audience would be business professionals, however being a national newspaper it is also geared towards general readers. It was written at the start of this year and I feel is still every relevant in the current economic situation regarding struggling businesses. The photograph used to illustrate the failure of businesses is of Elizabeth Kavanaugh and Jeff Rank standing outside their former business, Large Format Digital, in Edgerton, Wis. The photograph taken by a photographer for the New York Times represents the article well in the sense that it is bleak and snowing in the photograph. It reflects how the article sis concerned about how the people are affected in this type of situation, something I will look into in my inquiry.

The article starts with some statistics taken from the Bureau of Labor Statistics, that show it was a better year for small businesses in 2010 than it was in 2009- in 2009 the net loss was 400,000 companies compared to 96,000 companies in 2010. Much of an improvement I’d say. However the article claims that “numbers do not tell the whole story” and sets out to look closely to how it has affected six small companies.

Eilene Zimmerman is a journalist based in San Diego, California that writes about a variety of topics including business, social and political issues and family life. Her article covers the topic of why companies failed to survive with a brief paragraph on the six companies with the headings; At its peak, What went wrong and Looking back. I was very interested in analyzing the ‘What went wrong’ section.

Findings that relate to and support the arguments in my inquiry:

-          “she spent thousands of dollars on advertising that didn’t work” -Ms. Kero of Gotham Concierge in Manhattan. This statement supports one of the issues I will be examining with Celebration Music Theatre.  Within the first few months of opening the company had signed a contract with an advertising agency for thousands of dollars of adverts. They charged for everything- each new graphic design or logo, the running of the theatres website to even their Facebook, which is free! The marketing guy at the theatre had a friend who was a graphic designer. He eventually got hired to start doing new graphics for the theatre.

-          “too much time and money were spent on enhanced functionality”- Mr. Milley of iParents.com . Our theatre got off the beaten track when the decision was made to do three Broadway Shows and a Kids Show for the summer that was then to be taken on tour. They were too ambitious. Simple is better. We got carried away with trying to produce so many shows we lost what we were really about and that was ‘Superstarz Live’.

-          “potential investors skittish about the economy, pulled out” -Lisa Beels and Christine Naylor of Petite Palate. One of the major struggles the theatre went through was finding an investor to keep the theatre operating as well as pay the employees back. The main problem was by this time we had accumulated a big debt already that no investor wanted to take that on.

Although brief, this article touched on some reasons companies failed to survive that support some of the points I will be looking at in my inquiry. It has helped me to discover further questions I plan to use in my interviews:

-          Why was the Colin’s Company chosen to be the main marketing and advertising agency for the theatre?

-          What was this agreement like and was it over budget?

-          Who made the decision on bringing in the Broadway revue shows and using the same employees to help make this happen?

-          How were these shows budgeted for?

-          When did you realise there was no money to produce these show?