They tell you that most small businesses go belly-up inside of two years. If you can turn a profit by your third year, then you are in good shape. But what does it mean when your business lasts 1,400 years?

Kongo Gumi was a 1,400 year-old family-owned Japanese temple builder that recently went bust.

Why? For the same darn reason that many new companies are forced to close their doors: 1. over extended their financial resources as recession hits, 2. social changes reduced demand for what they produced.

Both factors are external and are very hard to control and hedge against. At the same time, however, these things don’t happen over night, and perhaps some alternative strategy could have been executed in order to keep the company alive and kicking – much like many of the previous Kongo Gumi’s CEOs did during trying times. One former CEO switched the company’s focus to manufacture coffins during WWII.

Labels: Business Strategy, External Factors, Small Business

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posted by Andres Zapata @ 8:20 AM