Latest List of Famous Failed Australian Startups and Businesses 2022
Table of Contents
The Australian Business Sector has seen its fair share of failures.
These Australian Business Failures include Australian Startups, Famous Australian Franchises, established businesses, and large companies alike.
The problems faced by these businesses have been accentuated even more since the Coronavirus pandemic began in early 2020, with many startups and small businesses having to close up shop.
This blog looks at some of the most popular names that have left the Australian startup landscape, along with what caused those failures and how the country can learn from them.
While this may seem a tad too gloomy for a world that is finally escaping the clutches of the deadly disease in 2022; but, the positive side to this is learning just how to avoid such failures.
Not only will you be able to learn why these businesses failed, but also learn just how you can avoid making the same mistakes they did.
Also, keep in mind that statistics show that new businesses and startups are risky ventures, with 90% of all startups failing in Australia.
It might be simpler to just look at the success stories and assess what they happened to do right.
However, that does not give the full story since various factors can contribute to the demise of a startup, with the primary reasons often being different across the spectrum.
Therefore, it is far more prudent and important to scrutinise what led to the failure of those that have closed up shop.
That is what we aim to do with this blog.
Still, scrutinising startups come up with its own set of inconsistencies and headaches.
The number of operating in the country is over 17,000 (source: Startup Stash), but it is the number of new ones popping up each year that really varies.
The startup rate in Australia these days is 5.8%, but that can easily decrease the very next year.
As per stats by the Small Business Administration (SBA), one-fifth of businesses fail within the first year of following the steps to register a company and get started.
After ten years, the survival rate is one-third of the surviving startups. (source: businessknowhow)
While it is said that it takes a minimum of four years before you’ve actually ‘set up your business, seven to ten years is what you’re looking to see your initial plan come true. (As long as you’re realistic)
Now that’s a long time involving a lot of hard work and a high possibility of failure.
Complementing this is an interesting study by the Australian Centre for Business growth.
According to the study – The reason why startups fail in Australia can be attributed to the following factors:
Poor Market research
Bad Financial Management
No control over external factors
Bad Leadership skills
No Planning or bad execution
These were the top 5 reasons that accounted for 70% of business failures in Australia (source: centreforbusinessgrowth)
While these reasons are well-touted, it is a mystery why a lack of innovation is not cited as one of the primary reasons for the failure of these startups.
We recently researched 15 famous businesses that failed due to a lack of innovation and were mystified by how these successful companies allowed their competition to outpace them because of complacency concerning their product.
Now those were some interesting statistics for you.
Time to move to the list for which you are on the blog.
Australia saw a record number of liquidations or administrations (3917) in the financial year 2021-22.
A major VC firm, Square Peg even issued a warning via an email to its investors that it regretted pouring so much capital into new companies as the economic situation in Australia continues to worsen.
The company warned that most start-ups would fall in the next few years. (Source: news.com.au)
Let’s now look at the list of the latest famous Australian startups and businesses which failed or closed shop.
About Alvey Reels
A fishing reel and rod company, Alvery Reels started its business 102 years ago in Brisbane. Founded in 1920, Alvey Reels was one of Australia’s oldest family-owned fishing companies. (Source: Official Website)
The company was started by a British migrant Charles Alvey who felt the need to produce easy-to-use fishing reels which could withstand years of wear and tear.
Charles Alvey was able to design a reel mechanism that allowed for smooth stripping and direct rewinding of the reel, eliminating the annoying backlash problem.
Charles got the design inspiration for his reels from the Scottish Malloch’s reels. (Source: Wikipedia)
The business saw its peak in the 1930s when Charles’ son had to join the effort to meet rising demands.
The company thrived for 100 years but could not bear the brunt of Covid-19-related business shock and finally collapsed in 2022.
The company will continue selling its products till the current stocks last, which may go on till January/ February 2023. (Source: news.com.au)
Reason for Failure
The company had been family owned for three generations but ultimately had to sell majority shares for survival in 2018.
The new owner Con Athen tried to re-energize the company through innovation and a new product line.
But Covid-19 proved too much for the already fragile supply chain, and the company had to shut down.
Athen blames the lack of local raw materials and supplies for impeding Australian manufacturing of fishing reels.
The company relied on many hand-made products not supported by the local manufacturing system. (Source: news.com.au)
The local system favors automation, and Alvey’s business model did not allow such a manufacturing switch.
In 2015, David Fairfull and Johnson Lin launched the Metigy to help small businesses deal with one of the biggest reasons for early failures: their marketing game!
The idea of an AI-powered marketing strategy company soon struck the right cords with the industry and the investors.
Metigy was valued at $1 billion a short time ago (April 2022) and showed a growth rate of 300%.
Despite these incredible numbers, the company folded on itself in Uly 2022 in a shocking development. (Source: AFR)
Metigy was not the first venture of the co-founders. Fairfull and Johnson had already helped build and sell two other startups, We Are Social and The Brave Group. (Source: Company’s Official Website)
Metigy was a spectacular success with investors and was being presented as an example case perfectly poised for an IPO.
However, the company’s demise shocked its employees in July this year (2022). The company employees described themselves as “shell shocked” on hearing the news. (Source: Express Digest)
The company’s collapse left all of its 75 employees jobless overnight.
Reason for Failure
The company was put under administration by its investors on a cue from a whistleblower.
The whistleblower alerted the investors about potential insolvency because the company’s director had lent $7.7 million from Metigy to his private company. (Source: Sydney Morning Herald)
Investors have voted to liquidate the company and to allow the company’s administrators Cathro & Partners to conduct a detailed investigation and audit of the company’s finances.
Millions of dollars were taken out of the company’s assets to pay for a couple of luxury properties in Sydney Harbour and kangaroo Valley. (Source: Sydney Morning Herald)
Only after the completion of the investigation, would we be able to know about the real reasons behind the company’s sudden collapse.
About Volt Bank
Volt was one of the famous companies based out of Sydney.
It was also the first Australian retail bank (aka neobank) that was given a license under a new scheme by the Australian Prudential Regulation Authority (APRA) under a new regulatory framework in 2019.
The bank was founded in 2017 and served via a cloud-based banking protocol.
It had initiated partnerships with PayPal, Cotton On, and Collection House in a bid to help expand its operations network.
Volt Bank started serving small businesses in 2020.
However, in June 2022, the bank announced the closure of its banking operations and voluntarily returned the banking license to APRA. (Source: Volt’s Official Website)
Reason for Failure
Lack of finances became the prime reason behind the bank’s demise.
Volt had earlier raised $212 million in seven private rounds of funding.
Before it ultimately collapsed, the bank hoped to raise $20 million more to continue its operation. (Source: Reuters)
Per Volt’s Chief Executive, Steve Weston, despite having a unique technology and capability in the Australian banking market, we have been unable to raise enough cash to keep our business going.
He blamed the pandemic and ongoing global economic situation for making the job of raising $200 million a failure. (Source: news.com.au)
Founded in 2021, Send was an Australian grocery delivery app that promised delivery of groceries within 10 minutes to its customers.
Send raised $3.1 million in funding within three months of its launch.
Send had 46,000 registered customers, served with the help of 300 employees from 13 sites and many dark grocery stores located throughout Sydney and Melbourne.
It provided services in 17 inner-city suburbs in Melbourne and 35 locations in Sydney. (Source: SmartCompany)
However, the company underwent administration in May 2022, less than a year after its launch.
Reason for Failure
Like most other startups, Send also ran short of cash to run its operations and couldn’t raise more funds.
One of the company administrators revealed that like most startups, Send was burning its capital to expand the business network and ultimately ran out faster than it could recoup. (Source: SmartCompany)
The company had increased its sale by 50 times ($417,000) in a short span of 6 months.
Contrarily though, the losses were also extraordinary – a whopping $2.38 million a month. (Source: news.com.au)
Another food delivery startup forced to face the dark alley was the proud Australian-origin app Deliver.
Once standing tall against international food delivery competitors, Delivr boasted a profitable business based on its local roots and networking strength.
In 2017 Alex Power founded the company in Ballarat. (Source: SmartCompany)
Delivr also partnered with chains like Grill’d, Schnitz, and La Porchetta to expand its customer and operations base.
But it wasn’t much far into the future that the company collapsed and had to liquidate in July 2022. (Source: ASIC)
Reason for Failure
Although the company did rather well during the pandemic lockdowns, it still ultimately ended up becoming a victim to one of the many of its after-effects.
The company’s founder zeros in on the lack of enough drivers, and the cost related to running their own drivers in direct competition with international food delivery giants became the Achilles heel of Delivr.
Additionally, the sales also tanked in the last few months, which left no choice for the company but to go for liquidation. (Source: SmartCompany)
About Probuild Construction Pty Ltd
Probuild Construction was an Australian company based out of Melbourne – owned by South Africa-based Wilson Bayly Holmes-Ovcon Limited, commonly known as WBHO.
Probuild was one of the biggest construction companies in Australia, focused on commercial, educational, industrial, residential, retail and entertainment, and sports facilities construction contracts. (Source: Bloomberg)
The company had 15 projects under construction when it suddenly had to go into administration in March 2022.
The sudden closure was caused by the voluntary administration of its parent company, WBHO.
WBHO’s administration has put 18 companies under its group, including Probuild, in limbo. (Source: abc.net.au)
The development is one of the most upsetting news in the Australian construction industry. (Source: wsws.org)
Reason for Failure
The company had to shut down its construction business after its South Africa-based parent company WBHO refused to provide financial assistance to its Australian arm citing depletion of funds.
WBHO claimed that it had provided $183 million in financial assistance to Probuild, significantly impacting the parent company’s financial ability to continue supporting the business. (Source: wsws.org)
Formerly known as General Motors-Holden, Holden was an Australian subsidiary of General Motors (GM).
The Holden automobile evolved from the Holden saddlery opened by James Alexandra Holden in Adelaide in 1856.
The company had a reputable name and even supplied equestrian equipment in Boer War in Africa.
As the horses were being replaced by automobiles, the company gradually shifted its focus to manufacturing vehicle hardware.
Holden manufactured imported and exported cars under its own marque in Australia. (Source: Wikipedia)
The merger between GM and Holden proved to be quite beneficial for Holden.
The merger, however, ended with the production of the last Holden-designed Commodore ceasing on 20 October 2017. On 17 February 2020, GM announced the retirement of the Holden marque in 2021. (Source: abc.ne.au)
Reason for Failure
Although Holden had been facing difficulties in exports since the 1950s, it started incurring unbearable losses from 2010 onward due to
- Strong Australian dollar
- Reductions in government grants and subsidies
- High manufacturing costs
- Competition in the local automobile market
These reasons resulted in GM announcing the closure of Holden’s engine production by the end of 2017.
The closure of Holden resulted in the loss of 2,900 jobs.
( Source: Wikipedia )
Chick N’ Chips
About Chick N’ Chips
Chick N’ Chips was one of the most loved Australian Chicken Franchise eateries in the Glenelg community of South Australia.
It served 100% free-range chicken with house-made and gluten-free stuffing. Chick N’ Chips boasted 100% process-free food.
Much to the customers’ shock, Chick N’ Chips shut down in September this year (2022), permanently closing all of its restaurants.
(Sources: Chick N’ Chips, MSN)
Reason for Failure
The restaurant came to a dramatic shutdown when the customer heard the news via a heart-touching note pasted on the restaurant door and their website.
It quite candidly announced the permanent closure of the restaurant based on two main factors
- Rising operational costs
- Lack of staffing
The restaurant extended heartfelt thanks to its customers and staff for their shared love and commitment to the brand.
The failure of Chick N’ Chips is another one on the list of many hospitality businesses hit by the pandemic.
(Sources: news.com.au, Chick N’ Chips)
Shoes of Prey
Michael Fox co-founded the business in 2009 with lawyer-turned-entrepreneur Jodie Fox and Mike Knapp, an app creator.
The shoes of Prey were unique since people could customize and design their footwear.
The high-flying business soon caught the interest of some well-known investors including American venture capitalist Bill Tai and Atlassian co-founder Mike Cannon-Brookes and to name a few.
In total, the company raised almost $30.6 million in funding from the above VCs and some of the other renowned VC firms like Blackbird Ventures Khosla Ventures, and Southern Cross Venture Partners.
Reasons for failure
The startup started to fall while attempting to adopt mass-market adoption, explains Michael Fox.
Fox explained the startup undertook market research with partners such as David Jones and Nordstrom to see if there was an appetite for mass-market fashion customers wanting to customize their shoes.
The startup found there was an appetite, Fox says, but only if they could reduce their lead time, simplify the design experience, expand their distribution and not charge a premium for customization.
“It was hard work, our business was operationally complex, and there were many challenges, but to the credit of our amazing team we executed successfully in all these areas,” he wrote.
However, despite the research and “all the right trends”, the startup failed to crack the mass market, with customers not responding as the startup expected.
Shoes of Prey co-founder Michael Fox said – he learned the hard way that shoppers have a subconscious desire to be shown what to buy, despite market research suggesting customers would be keen to create their unique styles on the shoe retailer’s website.
Another problem the brand faced was the operational framework for producing orders one by one incurred high fixed costs for the brand, without economies of scale.
(Source: smartcompany | ragtrader)
The Nerd Cave
The Nerd Cave was a startup that wanted to disrupt the traditional business model of the retail industry.
One that blended community centers, retail, and hobby stores all into one place. They were backed by the idea that a social element always adds to every experience.
Dev Desi once saw a scene in a movie where kids were playing arcade games, gambling, skateboarding, etc. in a single place.
He thought of turning the visual from this movie into reality minus the gambling, drinking, smoking….and foot clan (of course).
It all started by finding some business partners to help him fund his dream.
The strategy was simple. Find out the requirements of the existing gaming clubs and offer the local ones a new location to run their meetups, hangouts, and events.
The biggest generator for them was – word-of-mouth publicity.
Still, the journey wasn’t as smooth as the nerd cave expected.
What went wrong?
Much like any failure, there was no sole reason for the failures. It was a combination of a lot of reasons that led to the failure of this startup.
To start with – they changed location 3 times.
Out of the 3, the second was the one where they stayed the longest. It was, however, within reasonable proximity to 2 other game/hobby stores (both franchises of the same company) which gave them stiff competition. (Oops! Competition, who thought about that?)
The shifting demographics were another problem. The Nerd Cave was further away from the universities, losing the 20-30 age bracket.
They closed their doors after being in the new location for only 5 months.
During their time of operation, board gaming and gaming clubs evolved around them to be similar to what they were trying to do.
It meant the customers were looking at similar business models.
Near the end of the business, Dave Desi spoke with a few other store owners about the situation of his startup and someone said something that struck him as quite prolific – “when people start a business, we all think that the “thing” that will set us apart is “us”. We all say, “Well, I will treat my customers well and always have time for them”.
The problem with this mentality and thought process are that we aren’t selling ourselves. Your customers don’t know you are a nice guy until they have already become a customer. So, find the “thing” that makes your location unique.
We started with a very low capital ($75,000AUD). This meant that our start was slow and we really had to prove ourselves in the early portion of the Cave’s existence.
Another challenge we had was defining ourselves. We had a little of everything, which meant some people were confused as to what we were actually doing. This was generally overcome once they stepped through the door and experienced it for themselves, but we definitely should have had a stronger identity to breakthrough”.
Having an idea and making money out of that idea are two different ball games.
Time and again, we hear about startups and businesses that had a wonderful idea that attracted a lot of visitors/users, but the idea failed because the idea never had a monetization strategy.
The above situation is what perfectly describes the failure of Onepagetrip.
Onepagetrip – a travel itinerary-sharing community that helped like-minded people explore itineraries from other users and then use them to build their travel itinerary.
The 3 founders, Ana Santos, Jose, and Lucas, worked together for more than a year but couldn’t make any money out of it.
The first thing they wanted was to build a marketplace. So the company needed people to write itineraries and people to use/download them. They started by asking friends and family who helped them by sharing their travel itineraries from old trips.
Where it went wrong?
Onepagetrip’s portfolio of itineraries was increasing, and they did a lot of social campaigns, and build social communities, but nothing seemed to work. People didn’t have enough reasons to spend their time sharing their trip with others, and they didn’t have money to pay for the shared service.
They did a fair bit of Google AdWords and social campaigns to draw traffic to their site.
They had visitors come to their website – download the travel itinerary shared by others and leave without paying them anything.
They spent months building a product, making it better and better.
They got so involved in features and details that they forgot the bigger picture. Ana realized some of the disadvantages and summarized them.
“The biggest one was the competition; I had a feeling that I could put millions into Google AdWords and I could be the best person in the world optimizing for SEO, but I would never rank in the 1st 50 positions.
It was so frustrating, for every travel-related word, there were so many billion-dollar companies competing.
It was impossible for us to stand out. It would take us years, and we didn’t have the time. ‘Life
is tough, my darling, but so are you – Stephanie Bennett Henry.
I’m very persistent, and sometimes that is more emotional than rational – can be a disadvantage too.
But the second biggest disadvantage was our lack of expertise about how to build a startup, how to validate an idea, how to ‘pivot’, and how to validate the basic Business Model Canvas.
And the 3rd one I believe was our runaway.
Sydney is really expensive, we had to keep our day jobs and after one year Lucas, our tech guy, had to go back full-time to a day job too. The team broke, and there were no conditions to keep going”.
Asked, if there was one thing she would do differently.
Easy: quit my daily job, cut down my monthly expenses, apply to a startup accelerator program, get mentors, validate the idea before starting building the product, get advice from reputable mentors in the travel industry and build a strong business model before the 1st line of code.
Flipping back to 2008, Mathew Carpenter, a 16-year-old decided to get into importing consumer electronics, such as USB drives and MP3 players.
He saved up $1,000 from working a horrible afternoon job and was soon en route to turning into the 1st debt-free graduate in recent years.
Zor Technology, the business started by him was on track to do 6 figures in its first year.
Over time Mathew would sell his products on his website. There was no marketing budget. On the contrary, all the sales were through word-of-mouth publicity.
“Because I was always busy both before and after school, some of my friends caught wind of what I was doing and wanted in. Looking back now, I had somehow recruited affiliates, but back then, they were simply friends helping out. I designed a flyer template that I gave to each affiliate (I’ll stick with the term affiliate for now) and had them add in their name and contact number at the bottom of the flyer. I raised my prices to $55.00 per item giving each affiliate $15.00 per sale, which left me with a $40.00 profit. I remember before the Christmas break going to school a few times with a box full of MP3 players and handing out lots of 10 to people who expressed interest in selling. This was probably one of the easiest things I did to make a few thousand dollars – who knew teenagers were good salespeople!” says Mat.
His entrepreneurial story started to go viral, which helped him make Zor Technology more famous.
Mat felt that everything was going too well to be true. Only a few months before the business turned one year, he was forced to shut it down.
What went wrong?
Being a fresher, Mat was unaware of the repercussions of selling a product that closely resembled another company’s IP.
‘I still remember the day I got the phone call, I was sitting in the library processing orders and talking with my supplier when my phone starts ringing with an unusual number on the caller ID. It was a man who claimed to be from a law firm representing a major business in the MP3 industry.
The similarity between Mat’s MP3 Player and the company’s product was too close. He had to cease operations immediately or be sued.
He couldn’t take another order, couldn’t accept any more payments, and couldn’t even trade under the same name.
(Source: failory )
In 2008, Guvera started its journey on the Gold Cost. Within a few years, the startup managed to raise $180 million from 3000 investors.
AMMA Private Investment initially funded the venture, and the rest of the money came from approx. 1000 smaller investors – comprising accounting and financial services firms.
Chief executive Darren Herft told StartupSmart the business planned to take on Apple and Spotify by targeting emerging markets for its streaming services.
Guvera acquired Blinkbox Music from Tesco in 2015.
Part of the acquisition’s agreement was that it would pay its hired employees a higher rate of redundancy payment if the business failed – something Guvera failed to honor.
The above incident led to a £10m Employment Tribunal case lawsuit filed by former Blinkbox music employees.
And then the downfall happened – the employees won £3.5m in damages against which Guvera appealed and lost in Nov 2017.
Guvera’s business condition just went from bad to worse when it was placed under investigation by a corporate watchdog. The investigation came after a complaint by 3,000 investors on their $180 million investments in the company.
As per reports from ABC, some of Guvera’s investors had been questioned by the Australian Securities and Investments Commission (ASIC) after allegedly being promised huge returns on their investments.
Guvera reportedly used a network of accountants to convince investors to buy shares in its streaming service.
The company stopped operations less than 12 months after the Australian Securities Exchange blocked its listing on the share market.
Guvera shut down operations but is however reportedly trying to get a listing on the Macedonian Stock Exchange.
(Sources: wikipedia | smartcompany | musicfeeds)
Now the failures were not restricted to startups. Some famous companies failed in the Australian Market.
Ed Hardy Australia
The world of fashion owes it to Don Ed Hardy for bringing tattoo artistry into the glamorous world of fashion.
Don Ed Hardy quickly became popular for his Japanese art form and American style.
In 2002, Hardy ventured into the fashion space when he licensed his art designs to be made into a clothing line.
When fashion designer Christian Audigier joined forces with the brand, influencer marketing efforts went through the roof.
However, as quickly as you can rise, it could be the speed at which you could tank.
It did not take much time for the brand to deteriorate in the eyes of the consumers. By 2011, enough damage had been done, and Audigier sold the brand for $62 million.
Ed Hardy Australia had also become the center of jokes, with some of the following tweets, the day the brand went into administration
‘how will we spot bogans now?’
‘what I am gonna wear when I turn 50 and bleach my hair?’
Reasons for failure:
Christian Audigier, the licensee of the rights to produce the Ed Hardy brand, had his share of success with the popular brand Von Dutch. Thus he would be pretty inclined to use the same marketing strategies which led to the popularity of Von Dutch, which was marketing directly to celebrities, which he did.
It was extremely unfortunate that the celebrities they chose to sponsor were washed-out sports stars or unsuccessful Australian gangsters.
The result of such associations meant that a certain ‘type’ of Australian society member leaned towards wearing Ed Hardy clothes.
Now, these were not the kind of people society wanted to replicate or relate to.
The labeling of those wearing the clothes was extremely unpleasant.
The pricing of the brand was another issue. They were a streetwear brand, and the average shirt was $200.
Also, you needed to make sure that the t-shirt didn’t become dirty since one wash would mean, you have to throw away the t-shirt. (That’s how bad the quality used to get when washing the t-shirt)
Next was the design. Ed Hardy had a distinct, undesirable design.
Also, a lot of people found Ed Hardy’s designs to have a strong homosexual design, although this was not directly communicated.
Ed Hardy Australia just didn’t do enough to hold on to its customers, and the customers had much better alternatives.
‘If you don’t spend enough time meeting customers, you’re forcing them to meet competition’.
( Sources: Wikipedia )
Topshop, a British multinational fashion retailer that sells clothes, shoes, and accessories, comprises around 500 shops worldwide.
Out of the 500, 300 are in the UK. They also have a decent e-commerce presence.
In the year 2011, Topshop launched its Australian operations.
However, the dynamics of the Australian retail market were not well understood by Topshop, which led to its demise. In mid-2017, Topshop’s Australian operations went into voluntary administration.
What went wrong?
Topshop Australia was always in a tight spot, with H&M, Zara, and Uniqlo to compete with and the Brand’s combination of demographics and affordability was a big problem.
Urban rents in Australia are amongst the highest in the world, and Topshop opened shop at some of the priciest locations.
Add to the above, the humungous investment in its e-commerce business and you have a business running on high rentals with high operations costs.
It was a disaster.
What made matters worse for the company was the poor stock levels, often not carrying common sizes.
A lot of people complained about spending hours looking for their size jeans.
As per a 2014 survey by Fairfax Media,- an Australian customers paid up to 35% more than their UK counterparts for similar products, often receiving them after considerable delays.
Croquembouche the flagship dish by Adriano Zumbo helped him become a household name (courtesy – of the reality TV show MasterChef in 2009).
A show where he asked the contestants to recreate the dish.
It turned out to be a super-marketing strategy.
Zumbo was soon a household name.
Realizing the idea to be a hit, he returned time and again to the show giving out his share of recipes that he asked the contestants to recreate.
One thing led to another, and soon, Zumbo expanded his Business in Sydney.
It was a fairy tale story where Zumbo went from running a small Balmain bakery in Sydney’s inner west to opening 4 more Sydney stores, 3 Melbourne stores, 1 Sydney pop-up, and a high-tea salon in Melbourne.
As usual, a mix of reasons led to the failure of the business, but the one that sticks out like a sour thumb is the Soth Yarra bases Fancy Nance project.
“High tea on steroids,” a Guardian reviewer said of Fancy Nance’s 12-course degustation menu, which started with Linzer cake and “chouxmaca” (choux bun with macaron) and finished with pork rillette and osso bucco.
“Ultimately I don’t recommend that anyone eat a 12-course, mostly dessert meal,” she concluded, to which a lot of foodies agreed.
If Zumbo thought, over-expensive food and bad reviews were his only problems.
When the administrators felt that I’m So Fancy Pty Ltd – the brand name under which Fancy Nance and Little Frankie’s operated might have turned insolvent from at least early to mid-2017 – it meant more problems.
The discovery could expose Zumbo to fines, compensation, and more.
Things got worse when the wages increased, and operating expenses started to rise. The rising cost was never complemented by an increase in revenue.
Add it, Zumbo was also accused of underpaying its staff. Zumbo admitted to the charges and attributed payroll errors to the charges.
By March 2018, the tax office raised a winding-up order to recover unpaid tax to recover approx 1 million dollars in taxes.
Well! As they say – the government always knows where your money is. Zumbo wasn’t smart enough to outsmart the government.
(Sources: wikipedia | afr)
1996 was the year when two founders Max Fichtman and Oded Brenner founded the brand Max Brenner in Ra’anana, Israel.
A small handmade chocolate-selling business soon turned into the most sought-after place to be, when it came to chocolate; however, it wasn’t long before it became one of the casualties of the food industry.
Reasons for failure
The first, as one wouldn’t have expected, was a political one.
Strauss Group, Max Brenner’s previous company, used to publicly support the Israel army, which didn’t go down well for many.
“While it’s hard to determine whether it was a significant factor in Australia, Max Brenner — with its origins in Israel — has been, at various times, the focus of protests,” said Business trends expert Dr. Lauren Rosewarne from the University of Melbourne. “This was perhaps also a factor in its demise.”
“When Max Brenner opened in Australia in the late 1990s the food scene was very different,” she said.
“Now, artisanal chocolate and associated shops and cafes are everywhere: the novelty of Max Brenner has largely faded.
In 1866, Avon Products, Inc., a company involved in selling products in beauty, household, and personal care categories, was established.
The company garnered enormous goodwill in the beauty industry and clocked beyond impressive annual sales of $5.5 billion worldwide in 2018.
However, the retailer was forced to announce the closure in Australian and New Zealand markets by the end of 2018.
Reasons for Failure:
With an almost outdated business model of the door to door sales, the retailer was sure not in sync with the changing times.
Today, with the increasing working population, people might not be available at home to get the product handed over, adding to it the fact that online sales are rapidly replacing conventional retail stores.
Another reason for the failure of the brand was its inability to keep pace with customer and network members’ expectations which led to a horde of complaints against them.
And that brings us to the end of our list of failed startups and businesses in Australia.
Before we end or as they say “on an ending note” – Dear business owners please avoid tax evasion.
Come on, Mates! Don’t rip the government. They use the money to fund our schools, and hospitals and build the roads your business uses every day.
Interesting Stats about Australian Startups and Small Businesses:
While you are here, I thought of sharing some interesting startistics i found about the australian businesses and startups around their growth, failure and future.
- “Australian startup firms less than two years old were responsible for driving the 1.6m net new jobs created between 2003–2014, while on a net basis, large firms made a little contribution” – Dept of Industry, Innovation, and Science, 2016.
- Australia had the sixth-highest startup rate throughout the world in 2020 at 5.8% (Statista).
- In December 2020, there were more than 18,000 new business registrations in the country, with New South Wales and Victoria leading the way (ASIC).
- According to PwC, the Australian tech startup sector (companies with <$5m in annual revenue) has the potential to:
- Contribute $109bn (4% of GDP) to the Australian economy;
- Bring in more than half a billion in investment each quarter; and
- Generate 5,40,000 jobs by 2033.
All the above stats were from the medium account of air tree ventures (Source: medium) and statistics compiled by Take a Tumble (source: Take a Tumble).
- As per research by data and analytics providers million – In the year 2019, 54,992 small businesses closed in Australia.
- The number was 12.7% more than the number of small businesses that closed in the year 2018 (source: abc.net.au).
- Furthermore, due to the decreased revenue, 20,000 small businesses are expected to close once government support ends later this year (source: Small Business Australia).
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