When to say goodbye to a business

Posted on August 2, 2012 | in Confessions of a Serial Entrepreneur | by Richard

They crowded around, smiles beaming, and there was no way to say “no” to the “Pepsi boys”. We were on the beach in Mahabalipourum, India and my mate and I had just finished our daily game of volleyball with some local kids. We’d been playing each day and the custom had become to buy Pepsi Colas for the boys after the match.

What they really loved though was my new gadget, a digital camera. It was 1995 and before flying from London on holiday I had splashed out about a thousand pounds for one of the first cameras for the consumer market. Nowadays it would seem Stone Age, with a storage capacity of 12 photos and a twentieth of the quality of most cameras today. But back then, in India, it was a sensation. The boys jostled to get their shot taken and it was a marvel seconds later to see their picture on the little screen. Even the grandparent’s faces lit up in gappy grins at seeing their own image on an electric device.

Another mate of mine, Rob, sat in the shade watching. He wasn’t into volleyball and he wasn’t into my digital camera either. “Ricko, that’s just an expensive toy” he said afterwards using my Aussie nickname. “The quality is rubbish. They’re all grainy and the colours are terrible. I can barely see them on that little screen”. “Yes, Rob but you can see them better if I download them onto my computer”. “Download them?? Will you ever print them?” “Maybe some of them”. “Maybe?? Photos are to be seen. Put in frames and admired.”

Rob spoke with authority. Photography was his passion. He’d been a photographer for years. From Vogue to violins, he’d shot the lot. It was also his livelihood. He had three photo labs in Sydney selling film and frames, and developing prints. It was good business: he drove a Merc and lived in a million dollar house on Sydney Harbour.

“Yes Rob, you’re right. It’s crummy. But I think you’d better be careful, digital is a torpedo heading in your direction. The quality is only going to get better and better, and the price lower and lower.” Over the following days, I urged him to sell up his business. A bit radical you might say, urging someone to completely change their life and abandon a passion, but I was convinced. Occasionally we are all right about something and sadly I was right on that one. Over the next decade digital cameras boomed and photo film sales virtually stopped.

Rob put up a battle but blamed everyone except the new technology. Desperate for market share, other photo labs started lowering their prices on film and prints. Rob grumbled about the supermarket chain up the road, which kept undercutting his prices. “They’re cheap, they look cheap and their colours are terrible.”

Then with customer visitors dropping slowly but steadily, Rob blamed his shops’ landlord and sued. The landlord was the Church of England. “The nearer to the church the further from God” Rob said, which got him in the papers as the classic “Aussie battler” fighting for justice. Eventually the case was settled but his pyrrhic victory involved hefty legal bills.

Then it was the photographic film companies who stopped subsidising branded photo labs like Rob’s. “They’re abandoning us. They don’t understand the industry.”

Finally Rob went broke. He closed the last of his 3 labs and lost the house and car. He should have exited. But so should have big companies like Kodak. Obvious? Ask Nokia or Blackberry.