What can you learn when a business closes?

Today, I received the sad news that a local business is closing this week. I told my wife last week that I didn't see them lasting much longer. This business had been a thriving business since the 1960s. I can remember going to it as a kid and buying candy and sodas. What went wrong?

I hesitate to sound like an armchair quarterback, but I think there are some lessons that can be learned from their failure.

One, if something is working, leave it alone. Or at least, make truly minor adjustments over time, but don't cut off something that is working. This business has changed hands a number of times in five decades. Most changes kept the business like it was before. The last one, decided they had a better idea.

The business had been a local landmark store with minimal groceries. In recent years they added wine and craft beer. It also added food about 3-5 years ago, and it was excellent. The addition of food drew more customers in and the craft beer selection also added to the clientele, with the craft beer craze. The penny candies were still there. You could stop for a local paper, a sandwich, a loaf of bread, milk, and a new craft beer on the way home. Early last year, the food side of the store closed. That was a bad omen. 

The business changed hands again mid-year 2018. This time, changes started taking place that may have signaled big changes were coming. The newspapers disappeared first. That wasn't a big change, but a lot of people stopped by there on the way home to grab a paper. Unfortunately, they weren't profitable, so they had to go. The store was rearranged from its 4-5 decade traffic flow, to a new more open pattern, and ironically, it was awkward. The food made it back, and that was a good thing, but more changes were coming.

The owner decided to have live music on certain nights, and that was fine. The wine tastings and beer samplings seemed to be less and less until them disappeared completely. With the music nights, came fewer drop in customers who didn't want to be incorporated in the music scene. Fewer customers meant less beer and wine sales and soon there were fewer and fewer groceries available.

One thing about craft beer is that it is expensive. With fewer customers, fewer $12 beers were sold, and soon fewer beers were available. The wine selection started to decline, and finally, the wine rack was empty. The craft beer selection declined as well. It had previously been the biggest and best in town. 

The Second lesson that can be learned here is that when you see negative things happening, make quick adjustments. Just because you think you have a great idea, doesn't make it a great idea. This establishment had been a landmark in that area for a half dozen decades. People knew what to expect when they walked in the door. Suddenly, they didn't know what to expect day to day. 

It was easy to see the quick decline in the business, but for some reason the owner didn't seem to see it. It can be easy to be so married to an idea that you become blinded to the harm it is doing to your bottom line. That's how businesses end up hundreds of thousands of dollars in debt. They can't realistically assess their own business to see what is working and what is not. 

I took an axe to my marketing plans beginning in May of 2018. There were so many things not working that I hadn't addressed. When I finally took a serious look, it was time to start getting rid of the money wasters that never produced anything, and that was the majority. I eliminated five sources of marketing from my marketing expenses. It was freeing. They hadn't produced anything near the bloated promises made by the sales people who sold them to us. I loved every minutes of whacking those dead marketing trees down.

The reality is, if you can't objectively look at your business, your decisions and your results, you will have a hard time being in business over the long period. A major recession like 2008 could easily take you down if you don't have a business model that works in both good and bad times. Be honest with yourself. What is working? What is not?

I'm sad to see this business go. I went in their frequently for years, but as each new owner came along and made changes from the charm and magnetic draw this location had, I noticed that I was only dropping in once every couple of months. Multiply that by the 3 or 4 thousand residents that surround the business, and before you notice, the doors are closed. And if most people are like me, they will say, "I saw that coming."

 

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Give me a call, or email me for all your real estate needs, and let's make something amazing happen. 

mikecooper@cbginc.net, 888-722-6029

Cell: 540-336-5522

 

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(Disclaimer:  All grammatical mistakes, punctuation breakdowns and misspellings are purely for your amusement and entertainment.   Feel free to cackle.)