Lessons from Kodak's demise

Kodak was slow to embrace the digital era

We start today with the news that Kodak has entered into administration.

What is interesting about the iconic brand’s misfortunes, reports The New York Times, is the company’s suggested turnaround strategy.

Kodak, which used to account for 85% of the US camera market, wants to focus on consumer and commercial printers, but its critics believe this scheme is untested as to whether it can turn a profit.

Whether Kodak can emerge from bankruptcy remains to be seen, however this news raises awareness if you are struggling with selling your business.

The precarious nature of the business world large and small can appeal to buyers who enjoy determining why a business is struggling and stepping in to make it flourish.

A buyer with enough confidence and the right vision could turn an ailing business, which is often valued significantly lower than more outwardly successful businesses, around.

For example, Kodak, which once ranked as one of the world’s five most valuable brands, has found itself in murky financial waters as it had failed to respond to a changing market.

Adrian Kirby of private equity investment firm Ravensbourne says that businesses are a dynamic entity. And an owner or seller will not achieve long-term success unless they learn to adapt to an ever-changing market.

Flexible

Kirby goes on to say that owners must constantly study their competition as well as their own customer data and adapt their business where necessary.

The ability to recognise opportunities and be flexible enough to meet them is a key ingredient to surviving and even prospering in a tough business climate

The ability to recognise opportunities and be flexible enough to meet them is a key ingredient to surviving and even prospering in a tough business climate.

So if you are the kind of business buyer that is ahead of the latest business trends then you could well save an ailing business, with some tweaks of the product range or by targeting a different customer segment.

But before buyers rush out and purchase a business, it’s wise to understand that these are not the only reasons why a business may fail. 

Other reasons why a small business may fall on hard times are often financial in nature.

A business laden with either too much debt or too little investment could struggle unnecessarily.
There is even the rare scenario where a business grows too quickly for the owners to manage, leading them to sell it to a buyer who has the resources to help a business thrive in a fast-paced world.

Whatever strategy they take, let’s hope that Kodak can retain its business and its well-known brand name. That would be a real Kodak moment.

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Elsewhere, the ongoing lack of credit means business sellers need to be flexible, and, perhaps unsurprisingly, there’s a difference of opinion as to whether they are wise to this reality.

In our recent quarterly survey, 83% of the buyers surveyed saw too many overpriced businesses and inflexible sellers.

However, three quarters of sellers in the same survey claimed to be willing to be at least moderately flexible.

We also found that the most popular reasons for buying rather than starting a business from scratch are financially motivated.

Asked why they wanted to buy an existing business, half of those surveyed cited a desire to generate an immediate income.

Thirty-eight percent saw a business purchase as a cost-effective way to get into business
and 34% said the lower risk of failure was instrumental in their decision.