The Academy

5 Failed Businesses And Why They Failed

Part 2

Last week, we started a series on business failure and the value of the lessons learned for future success. In our previous article we examined 123Next newspaper and the digital start-up, Showroom.ng, this week we continue our exploration: 
 

High Television (HiTV)

In 2007, sports viewers were excited when Toyin Subair launched HiTV, a multi-channel digital entertainment satellite station.  HiTV was the first television platform in Africa to deploy Hypercable, a terrestrial pay-per-view TV decoder system. The firm secured a five-year exclusive right to broadcast the lucrative English Premier League in Nigeria, in a bid that pitted it against an African broadcast giant. Its existence lasted only those five years.

Starting a satellite TV station, which could compete favourably with established ones from its inception required intensive capital. HiTV sought huge bank facilities and funds from other investors, which translated into signing bilateral and multilateral stakeholder agreements. These agreements were apparently not properly managed. Therefore, diverse interests came to play in its operations. When it became clear that they couldn't get their investors to be on the same page, the business collapsed under its huge debts.

In 2016 after a long silence, Subair had this to say on his LinkedIn page: “I failed to know and manage my investors properly, which made it hard for me to mediate when they didn't see eye to eye.”
 

Air Nigeria

Jimoh Ibrahim took over Virgin Nigeria and reestablished it as Air Nigeria in June 2010. He promised to turn its fortune around. In September 2012, just over two years after, the airline announced that it had fired its employees and was suspending all services.

It is often said that the easiest way for a billionaire to become a millionaire is by starting an airline. The aviation industry is delicate and susceptible, so to stay afloat in the aviation business requires loads of capital, impeccable customer service and innovative thinking. It turned out that Air Nigeria lacked all.

Air travel is about safety and comfort. According to Ibrahim, he decided to shut down the supposed national carrier when it became clear that he couldn't guarantee both due to mismanagement. “People running the airline were printing tickets and selling them but the ticketing wasn't going into the system. If people are corrupt within an airline they can compromise safety,” he said in an interview in 2016.

Erisco Foods

In November 2016, Erisco Foods Limited, a wholly indigenous food processing company, announced the shutdown of its tomato manufacturing business in Nigeria.  The chief executive officer of the company, Eric Umeofia, cited an unfavourable operating climate, which has escalated operational cost of production. The company eventually relocated the manufacturing aspect of the business to China from where finished products would be imported and sold to consumers in Nigeria. 

Before the eventual shutdown, the company had embarked upon a media campaign drawing government's attention to its inability to compete with cheaper imported brands, especially from China. Erisco's might be a case of external factors, especially those of policies and infrastructure, which made the importation of what it produced cheaper than locally produced ones. However, sourcing raw materials locally is one way other food processing companies have been able to keep prices down and stay in business against all odds. Resilience is crucial to the success of a business