Yesterday we talked about the gap between what MyFC (My Football Club) initially promised and what the venture actually delivers in terms of value to the users. Today let’s talk about another company that arrived with a big bang but ultimately collapsed when the revenues did not materialise as expected (or rather, as their huge investments demanded).

FanBanta went bust some while back - the official word is that they’ve gone into administration, a euphemism for ‘we bet too much on the wrong horse’ and now one of the properties they owned (footballforums.net) has been bought out by Fast Web Media, the same company that owns 4thegame.com.

Recently over at Hive we talked about the need to operate in an emergency turnaround phase when running your business. To quote:

Run your business as if you were in debt and had to increase your revenue / cut spending massively to break even. Force yourself to squeeze more money out of your blog than before (keeping your long-term goals in mind) and cut all unnecessary spending. Attach a monetary value to every action. If done right, this will give you more money to reinvest in your business, which, if spent wisely, will help you grow much faster than you would by blindly slapping linkbait on your blog.

I was talking about blogs but the rule applies to businesses offline and online as well.

Don’t bet on speculative future earnings. Learn to bootstrap your dreams as efficiently as possible. There are times when you will need to spend a lot of money, but there are also times when the numbers and more importantly the growth trends will scream at you that you are overspending. Usually by that time it’s too late, and you’re in a financial crunch. And if you’ve spent too much money, you’re going to go the FanBanta way.

It takes $20 to start a business online - no reason you should spend $20,000 unless you can guarantee, with an acceptable level of risk, returns that justify that spending.