Kongō Gumi is a Japanese construction company, purportedly founded in 578 A.D., making it the world’s oldest documented company. What can we learn about building sustainable businesses from them?
Wondering how to build a sustainable company that could last for a century? Look no further than Kongo Gumi, the world’s oldest continuously operating corporation. Founded in 578 AD in Osaka Japan, this construction company remained in family hands for an impressive 40 generations. Despite its longevity and successful innovations such as being the first to use cement and CAD/CAM technology in Japan, Kongo Gumi eventually faced bankruptcy in 2006.
Reflecting on the keys to long-term business success, it’s crucial to understand your market, offer something unique, and ensure a positive cash flow. In Kongo Gumi’s case, despite surviving various challenges over its 1,400-year history, the company faltered when it gambled its future on unsustainable debt during a booming market period in Japan.
Why did Kongo Gumi die after hundreds of years?
In the end, what mattered most for Kongo Gumi’s downfall was the neglect of cash flow management. Positive cash flow is essential for a company’s survival, and when it diminishes, it’s crucial to analyze the reasons and take corrective actions. The story of Kongo Gumi serves as a valuable lesson on the importance of sustainable financial practices for long-term business viability.
Interested in investing in centennial companies? Reach out to Michael Cooper at [email protected] for more information on his research newsletter.
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