In the 1980s, Donald Trump was one of the most famous names in the business. He had built a massive empire of hotels, steakhouses, casinos, real estate, and more. But he had failed at one venture after another until he finally gave up on it all: the casino business. His experiences in this industry taught him that there is no such thing as a sure thing when it comes to running a business.
At the same time, his failures also taught him that it’s ideal to limit your exposure to certain types of businesses so you don’t waste your time and money trying them again. That’s why he decided not to run any further casinos again.
He underestimated the importance of licensing and brand value.
Casinos are a form of entertainment. To appeal to the customers, the casinos need to offer certain activities like gambling, dining, and nightlife. If a property is licensed under a certain brand, then it gets the benefit of that brand name. For example, a casino owned by a specific brand may get more customers than an unbranded competitor simply because the customers associate the brand with the casino.
If a property is also licensed to operate as a hotel, then it has the additional benefit of being able to offer rooms for a short stay like Airbnb. Therefore, the better the licensing and branding, the higher the value of the casino. By the late 1980s, Trump realized that he still did not have a good licensing and branding strategy for his new casinos.
As a result, the casinos were not able to attract enough customers and were ultimately not profitable. Trump tried various tactics to improve the licensing and branding but was unable to achieve the desired results. Ultimately, the problem was that Trump was not a businessperson and could not identify the key issues related to this aspect of running a business.
He overestimated the difficulty of running a casino.
Many businesspeople assume that running a casino is easy. However, the reality is that it’s very difficult. You need to understand the gambling laws of each state, you have to have a team to help you run the business, and you have to maintain good relations with the government.
In addition to all this, you have to make sure that your casino is profitable. If a businessperson underestimates the difficulty of running a casino, then they are more likely to make mistakes. Trump had an exaggerated view of his ability to run a casino. He believed that he was so good at running a casino that he didn’t need any assistance.
This self-confidence led him to make key mistakes. For example, he thought that he didn’t need any experts to manage the construction of his new casinos. He thought that he could manage the construction to make sure that it was done on time and within the budget. However, he was not able to understand the importance of this aspect of running a business.
He underestimated how much competition matters to a business.
In the casino business, there are many competing casinos in any given city. Therefore, the owner of a casino must find the right location. You also need to find the right kind of customers, and you need to run your business well to be successful. This is where competition comes in.
A businessperson who underestimates the importance of competition is more likely to make mistakes. In the casino business, you can judge your success by the quality of the customer experience. If a customer walks into the casino and feels welcome, then that is a strong indicator of the quality of service. The same is true for the games and other activities that the casino offers.
So, the proper management of the competition is critical for success. In the casinos that Trump owned, the customer experience was not good. He never managed the competition well. The reason for this likely was that he had no idea how the business worked. He never cared about the customer experience, and he cared even less about the competition. As a result, he was left with a handful of unprofitable casinos.
He didn’t learn from his mistakes.
Most businesspeople who have failed in the casino business eventually learn from their mistakes. They realize that they have made several errors, and they start trying to correct them. They also try to learn from the mistakes of others. For example, they might read books or listen to podcasts that provide business advice.
They might also try to talk to successful businesspeople and learn from their mistakes. Trump never took any of these steps. He never tried to learn from the mistakes he made in the casino business. Instead, he decided to move on to the next big business venture: the New York real estate market.
He was unwilling to listen to other people’s advice.
The casino business is highly competitive. Many businesses are competing for customers, and you will have to innovate and change your strategy to stay ahead of the competition. You will also have to listen to the advice of your competitors, your bankers, and your investors to stay profitable.
Trump never tried to learn from the mistakes he made in the casino business. At the same time, he also never asked his business advisers for advice. He would only ask them for their help if he needed something from them. For example, he might ask his bankers for a loan or to manage his investments because he was not interested in learning from his mistakes.
The results of this approach were devastating. Trump’s casinos were not able to stay profitable, and they became more and more loss-making. Eventually, they were all closed down.
Bottom line
Trump’s failed casino foray taught him a valuable lesson. In business, nothing is a sure thing. If you want to succeed, you have to be flexible and learn from your mistakes. The casino business is highly competitive, and you will have to innovate and change your strategy to stay ahead of the competition.
You will also have to listen to the advice of your bankers and your investors to stay profitable. Trump never tried to learn from his mistakes. At the same time, he never asked for advice from his business advisers. He would only ask them for help if he needed something from them.
The results of this approach were devastating. Trump’s failed casino foray taught him a valuable lesson. In business, nothing is a sure thing. If you want to succeed, you have to be flexible and learn from your mistakes.
