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Donald Trump had ambitions to be a successful businessman from the beginning of his career and did quite well for a while. But it wasn’t long before many of his businesses started experiencing financial disaster after financial disaster—exposing his lack of experience handling large amounts of money.
Today much has been written about Donald Trump’s failures in business, and we are about to explore some of those missteps and their impact on those affected throughout his time as a businessman.
The Business Failures of Donald Trump
Trump Airlines was an airline business created by Donald Trump in 1989. It operated out of New York City and offered domestic and international flights. Trump Airlines was a small airline, and its service was limited to only seven U.S. and two European cities.
Due to its limited size, Trump Airlines quickly faced marketing and operational challenges. It struggled to compete with larger airlines such as American and United, which had more resources and destination options for travelers. Trump’s partner, Eastern Airlines, helped supply trained crew and airliners, though their fleet also needed to be improved. Even with the added support, Trump Airlines was inexorably struggling.
The biggest challenge for Trump Airlines was its lack of technology and investment. Despite their ambitions, the airline could not invest in the necessary technology and amenities to remain competitive. This put the airline in a difficult position, and the expensive upgrades could only be made with significant investments, which Trump could not muster. Because of this, the airline needed to catch up with its competitors regarding customer service, booking seats, and even safety.
Trump Airlines also missed out on more lucrative routes because of its limited resources. As a result, the airline could not find profitable routes for its customers, leading to a lack of long-term growth. The airline also suffered from high costs due to fuel prices and maintenance costs. Trump Airlines didn’t survive these financial issues and ended operations in 1992.
Trump University was an unaccredited business venture owned and operated by Donald Trump and his associates, where students paid anywhere from $1,500 to $35,000 to learn the real estate mogul’s business techniques. Trump University promised students exclusive and helpful information about real estate and finance, but this promise was quickly exposed as a sham.
Trump University’s instructors had no real business experience; the courses were merely poorly researched materials and recordings of Trump’s reality T.V. appearances. Trump University’s courses were also alleged to make money-back guarantees to students, which they could never keep.
In 2014, New York Attorney General Eric Schneiderman filed a $40 million lawsuit against Trump, alleging that the entrepreneurs perpetuated a scam that had fleeced its customers through false promises and misleading statements. According to the lawsuit, “Trump University made false promises to convince people to spend tens of thousands of dollars on ‘classes’ and to pay for expensive and largely useless seminars and mentorships.”
Trump attempted to discredit the case, calling it “a politically motivated lawsuit,” but the State of New York ruled that the institution was illegally operating as an unlicensed educational institution. The evidence against Trump University became increasingly damning, with students of the university recounting how they were encouraged to go into debt to pay for the courses.
The case was ultimately settled in 2018, with Donald Trump paying a $25 million settlement to those who had taken courses with Trump University. Trump also agreed to end the program, never to again offer education courses under the name of Trump University.
Trump Casino is a name that has become synonymous with financial woes and questionable decisions. Located in Atlantic City, Donald Trump’s casino portfolio included the Trump Plaza, Trump Marina, Trump Taj Mahal, and the Trump World’s Fair at the Trump Plaza.
Trump Plaza opened in 1984 and served as a lavish casino and hotel. The hotel’s amenities included a beauty salon, a health club, boutiques and shops, indoor gaming areas, and a spa. However, after just 11 years in business, the Trump Plaza declared bankruptcy, citing a “lack of capital resources and liquidity,” and the casino closed in September 2014.
In 1997, the Trump Marina was purchased by Trump Hotels & Casino Resorts and opened as a replacement for the Trump Plaza. The Marina was located on the waterfront, featuring a hotel, multiple restaurants, and a marina. Despite the luxurious presentation and upgrades, the Marina was just 4 miles away from the Trump Plaza, and the competition was too much for the casino. In 2011, it was sold off and renamed the Golden Nugget.
The Trump Taj Mahal was Trump’s most ambitious project. The casino opened in 1990 with a public performance by legendary boxer Mike Tyson. The $1 billion casino featured multiple restaurants, a shopping center, and a theatre. However, due to financial problems, Trump was forced to give up management control of the Taj Mahal in 2009 and eventually sold his shares in the casino. After multiple bankruptcies, the Taj Mahal finally closed in 2016.
The Trump World’s Fair at the Trump Plaza was the last of Donald Trump’s casino-hotel ventures. Opening in 1996, it featured a 2,500-seat auditorium that hosted performers such as Aretha Franklin, Tony Bennett, and David Copperfield. Unfortunately, like his other casinos, the World’s Fair was a flop, and Trump filed for bankruptcy in 2002. The building was later sold off and demolished in 2006.
The Trump Network was a multi-level marketing (MLM) company founded by Donald Trump in 2009. It focused on health, wellness, and nutritional supplements and offered its customers personalized health assessment packages and accompanying products. Trump hoped the company would help Americans lead healthier and more productive lives. Unfortunately, the company failed to achieve the level of success that Trump had anticipated and was ultimately sold to another MLM company, Ideal Health.
The main problem with the Trump Network was its business model. Its primary focus was auto-shipments—customers were automatically sent health assessment and nutrition packages, regardless of their needs or wants. While this could be a profitable model for some MLMs, it did not fit into Trump’s vision for the company. He wanted to create a company about personal wellness, not a money-making venture. Because of this, many customers felt like they were being taken advantage of and quickly abandoned the company after being repeatedly sent products they were not interested in.
Moreover, Trump’s lack of understanding of the MLM industry was his downfall. Although it could be a successful method to promote products, he and his company were accused of fraudulent activity due to his inadequate assessment of associated risks for starting an MLM business. This eventually led to legal issues that hindered any potential success of this venture.
This lack of understanding and evaluation also explains the lack of success of the Trump Network. Trump needed to plan for the company’s long-term success properly and, as a result, attract enough customers to make it sustainable. There was no clear or cohesive marketing plan, and customer reviews of the product were poor.
Trump Vodka was one of Donald Trump’s most notorious business failures. It was launched in 2006, with Trump claiming it would become the country’s number-one premium vodka brand. Trump Vodka was sold in multiple liquor stores across the country, but it had yet to achieve the widespread popularity that Trump had hoped for.
Trump Vodka was produced by Drinks Americas., a Connecticut-based spirits distributor, and was made with Dutch neutral grain spirits. The vodka was marketed by an aggressive marketing campaign, which featured Trump’s face and tagline, “Success Distilled.” However, the advertising campaign failed to capture the public’s attention, and the sales of Trump Vodka were never very impressive.
Sadly, Trump Vodka did not meet the mark in terms of its taste. Moreover, with a price tag of $30 per bottle – many felt it was too expensive for what it offered. With distribution limited to only certain states, awareness levels were also incredibly low outside those areas. To top things off, Trump’s usually loud and aggressive approach to marketing clashed severely with the competitive vodka industry, one marked by numerous similar products at varying prices.
Trump the Game
Trump the Game, created by Milton Bradley in 1989, was a board game based on the business practices of real estate mogul Donald Trump. Players assumed the role of one of four fictitious real estate tycoons and competed to build an empire. The game was designed by renowned game designer Edgar M. Borges and was the shortest-lived game created by the company.
The game aimed to accumulate the most money and properties by the end of the game, which lasted about an hour. Players started by rolling dice, then buying, trading, and selling properties, constructing buildings, and mortgaging their assets. Trump the Game was divided into three phases: real estate negotiation, real estate making, and stock market manipulation. Drawing from Trump’s actual real estate practices, players had to negotiate with rival players, utilize their resources to construct buildings, and work to manipulate stock values. Players also had to act swiftly to avoid bankruptcy.
The game had its share of criticisms, mainly related to the influence of Trump’s business tactics. Many people saw the game glamorizing the practices of shady business dealings popularized by Trump, such as exploiting legal loopholes, cutting deals with other firms, and refusing to pay subcontractors. Trump the Game was intended to teach players about the world of finance, but instead, it seemed to many to be an endorsement of underhanded and unethical business practices.
The game was also criticized, both at the time of release and in the years since, for its bleak neighborhood, which was a central part of the game and based on New York areas blighted by poverty and social issues. For example, the Lower East Side was depicted as a vile and dangerous setting and was one of the locations that could not be improved upon.
Trump Steaks, launched as a partnership between Donald Trump and The Sharper Image, was a meat and steak product line marketed by Donald Trump in 2007. This product range was met with a lot of skepticism and criticism, and ultimately, it would go down as one of Trump’s most famous and infamous business endeavors.
Trump Steaks were sold in The Sharper Image and QVC stores, as well as in Trump Tower, with the major selling points being the quality of the meat, none of which was USDA approved, and the presentation. The steaks came packaged in a luxurious mahogany box with a slogan, “It’s not just a steak, it’s a Trump Steak.” The packages ranged between $199 and $999, which came with a complimentary golf towel.
Customers who bought the steaks found they were not getting the expected quality. Many consumers described them as “below average” and “tough” regarding quality and taste. In addition, most of them were rated lower quality than most other steaks available on the market. The steaks were also extremely expensive compared to the production costs, which resulted in complaints about the prices needing to be lowered. Furthermore, reviews indicated that the kits frequently needed items, including the promised golf towel.
Donald Trump’s business venture, Trump Mortgage, was established in 2006. Initially, it was promoted as an ambitious auxiliary to the Trump organization’s property development sites and casinos. However, Trump Mortgage was intended to be a flagship of the Trump brand.
Trump Mortgage offered services that assisted people in purchasing homes and included mortgages and refinancing services. The brand claimed to offer competitive mortgage loan products; however, its services were not competitive with those of other mortgage providers.
Trump Mortgage loaned money from Deutsche Bank, which funded the venture and incurred most of the financial losses associated with the failure of the business. Trump Mortgage accepted loans for risky mortgages, which would later fail during the 2008 financial crisis.
To save Trump Mortgage from financial collapse, Trump Organization partnered with an independent mortgage lender, using Trump’s name and resources to attract new customers. However, customers needed help finding the business or information about it, and it could not make a profit.
Although Trump Mortgage received positive press attention, it failed to gain public trust in the mortgage lending business. Trump Mortgage could not maintain a sustainable growth rate and transition into a profitable enterprise.
The business was sold in 2007, barely a year after its establishment, and blamed on the downturn in the U.S. housing market. Trump claimed the enterprise was “one of the most highly respected mortgage companies in the country” when its bankruptcy was announced.
Donald Trump has had a long and varied business career, with many successes and failures. There are many examples of business failures, from his failed venture of Trump Steaks to the bankruptcy of Trump Mortgage. Despite his failures, Trump has maintained his presence in the business world and continues to be a major force in the business community.
Trump’s most memorable failures are a reminder of all the risks associated with running a business. Learning from these mistakes and successes is essential to benefit others and prevent future failures. Trump’s failures can be a valuable lesson for aspiring entrepreneurs considering starting their own businesses. It is necessary to understand that success is not guaranteed and that it takes hard work and dedication to succeed in the business world.