Borders' Books Bankruptcy Has Lessons for CPA Practices

What could Border's Books have done better prior to its chapter 11 filing that might help you improve your accounting practice? Border's ruin was brought about by it's own management because it failed to realize the significance of emerging technologies. Borders' ruin was predictable to someone who keeps their eye on technology. The cause was their refusal to accept electronic delivery. For CPAs and accountants, modern technologies like websites and online marketing can seem every bit as distant from their core business as they must have to Borders. So pay attention to Borders' missteps! Understanding emerging technologies will protect your firm from facing this kind of crisis.

Historically, communications didn't change much until the last few decades. Then, electronic communications quickly overtook print communications, making products and services much easier to find, access, and deliver. The technology revolution coincided with greater environmental awareness. Electronics also meant less need for paper resources. Today's world is online. Almost every reading material you can think of is available electronically. Forward-thinking marketing approaches like compelling websites for accountants are simply imperative.

Once Borders Books was at the top of its industry. Few companies could match its worldwide brand recognition, valuable stock, and distribution muscle. But despite the technological changes over the last decade, Borders chose to pursue a strategy of business as usual. They did not get on board with e-books or e-communication; Their technological literacy was minimal. Their payback didn't take long. The strategy failed and so did Borders. Even their proven marketing tools failed them. Marketing cannot save a bygone business model.

Technology continued to advance and Amazon and Barnes and Noble were early adopters. It wasn't long until their e-book and online sales added significantly to their bottom line. Both Amazon and Barnes and Noble pulled ahead of Borders based on their electronic savvy. Meanwhile, Borders slept. Previous customers of Borders who became excited by the electronic possibilities had to use more accommodating booksellers. As in any industry, once a customer has made a switch to another company and finds it satisfactory, that customer is almost impossible to retrieve.

Borders realized sales were declining while their competitors were growing, yet Borders clung to its former business model of retail sales and ignored new technological opportunities. In just a matter of months it was easy for customers and bystanders to desert Borders for their cutting edge competitors. Customers want to deal with a company that shares their interests and vision. Borders' procrastination became their downfall.

They turned their attention to marketing ploys. That further eroded their business model. In an effort to shore up eroding profits, Borders raised prices in retail stores and online, antagonizing their loyal customer base. Amazon and Barnes and Noble, along with other independent booksellers, rejoiced. They welcomed the loyal customers that Borders was losing. This was the final straw for Borders Books, which was forced to file for bankruptcy.

As this case shows, reluctance to recognize and respect a changing business environment can quickly lead to death spiral of wrong decisions. Accountants are the same as every other profession. They must understand new technologies and tools such as marketing websites for accountants. For accounting firms this the primary lesson we can learn from the downfall of Borders Books.

Kenneth Marshall is a marketing expert and one-time Corporate Officer of CPA Site Solutions. His AOE is marketing small practices by exploiting high-quality websites for accountants. While using social networking and Search Engines forms the basis of his practice he also stresses the importance of good, old fashioned network marketing and excellent customer service in helping accounting and CPA firms build their client bases.