Re: Opening Stores Since The Recession Seems To Be Over -- Small Businesses Discussion Forum

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Subject: Re: Opening Stores Since The Recession Seems To Be Over

Author:
Dennis S Vogel

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Date Posted: 01:55:59 11/30/14 Sun
In reply to: Hoping To Succeed This Time 's message, "Opening Stores Since The Recession Seems To Be Over" on 01:09:19 11/30/14 Sun

This issue can have a potential infinitude of permutations. More details can help you limit what you need to investigate further.

Unfortunately, details may be accurate for short periods, so due diligence is necessary to determine how reliable details are now & will be in the future.

Anybody, who reopens her/his store, should check with a lawyer about possible legalities after having a "going out of business" sale.

It's generally illegal to have a long-term "going out of business" sale. Reopening could be interpreted/misinterpreted as a "going out of business" sale extension, depending what's done & how.

Why Did Some Stores Close - Permanently?
You may've heard rumors/gossip & theories about why stores are shut down. There may be some accuracy in whatever people say.

Were there cash flow problems? Usually, businesses are closed because there isn't enough cash flowing in compared to cash flowing out - or what would flow out if cash were available.

So low 'cash flow' doesn't explain much. Why were expenses higher than income? Why was income too low?

Analogy: A person will faint without a continuous oxygen supply, but diagnosing & solving the problem requires more relevant information. What interfered with oxygen absorption?

Lack of sales revenue may be a partial reason. A business can sell a lot of things & lose a lot of money.

Better questions would be - Why was the sales volume low? - or - Why wasn't there enough of a margin per sale to cover expenses?

"You Cannot Change What You Do Not Acknowledge."
This is Life Law #4 from Dr. Phil McGraw's book "Life Strategies: Doing What Works, Doing What Matters". It applies to every aspect of every life.

Some former business owners might not admit to themselves or to others what went wrong.

When businesses fail, instead of focusing on their choices that led to failure, former owners may blame competitors &/or consumers. Their main problem could be blaming others instead of taking responsibility for solving problems.

Optimal marketing isn't a matter of waiting for consumers to find a business & decide to buy. Business owners should promote products, services & their businesses.

Business owners & staff members have a duty to serve customers by selling enough of what customers want/need.

Some retailers close stores because they want to do it by choice, instead of seemingly being forced by circumstances.

Some retailers want to sell their stores & use the money for retirement funds. If they notice it won't likely work that way, they may close their stores instead of risking more losses.

Knowing why they closed may help you as long as you interpret their reasons as potential warnings instead of predictions of your fate.

Their reasons are based on perceptions of what had been, is happening & could happen. Apparently they felt they didn't have sufficient resources for what they perceived.

You might disempower yourself if you believe your situation will be the same as theirs. You can make necessary changes if you think a particular situation would be the same or similar for you.

You may have or be able to get resources former retailers didn't have or find.

Why do businesses fail? Any business failure could be due to one major mistake or problem, but there are apt to be multiple factors.

Many accurate reasons & theories could apply to one case study. Did a retailer have: 1- enough startup capital? 2- the right inventory & market niche? 3- optimal marketing? 4- enough product knowledge?

The answers for each of these issues (plus others) could be 'No'.

If each cause would be rated as a percentage, the primary cause of failure could be 40% or less. The other causes could combine into 60% or more.

Having enough startup capital is vital, but how much money is enough?

If a store starts with positive cash flow in the 1st month, enough startup capital could be $1,000. But if expenses are far higher than positive cash flow, millions of dollars may be too little.

Is the local market saturated for that product category? Is the overall market mature & declining?

How durable are the products? How likely soon might an upgrade or disruptive product be available to you?

Disruptive products may be produced & sold through different supply chains than the products that are disrupted. Stores in other supply chains get disrupted with the other members.

Are there enough early adopters to buy the latest upgraded or disruptive products?

Optimal Marketing can offset some location issues, not all.

Did their advertising promise/imply more than the in-store experience provided?

Did they (try to) copy "successful" business practices that are inconsistent &/or incompatible with their positioning, USP, 3 Ps, RPV business & customer service brands? Were all aspects of their stores compatible with their market niches?

As you learn more about what your niche members want, need & expect, you should determine what your business culture, strategy & tactics should be.

Businesses May Be Brought Down By Non-Business Problems
Some external problems may contribute to business failures.

There are likely to be multiple reasons for closing a store - some reasons would have higher priorities than others. Some reasons may be personal or familial - private.

Recessions could be local instead of national. Retailers may suspect employers may lay off some workers or leave town.

New taxes &/or proposed laws could cause concerns about business viability.

Was the location unfavorable as far as safety (crime, dark sidewalks &/or parking lots.

Were there enough parking spaces with favorable time limits so people could shop without getting parking tickets & those who looked for spaces could quickly find some?

Were stores handicapped accessible (wide enough doors & aisles? Were stores close to handicapped parking slots?

How many small stores in that city were/are direct competitors?

Even if the risks would be essentially identical no matter who owns a store, some people are better prepared turn some problems into challenges & find opportunities.

Expectations, Goals & Perceptions Of Success & Failure
If retailing partners expect different year-end profits, one partner may think their store is a failure. The other partner may think their store is wildly successful. It wouldn't mean either is wrong or right.

One partner may want to close a store to end perceived risks. If the other partner doesn't have enough resources to continue, the store is doomed.

Anybody may perceive a business as successful, though the owner didn't achieve his/her goals.

People shouldn't expect to have a perfect startup. At some point, planning & analysis could be too much & take too long with not enough action.

Often despite extensive & expensive research, there's no way to know how well a business will work until it's started & attracts prospective customers.

If a perfect business startup is possible, that state of perfection would be relative to a specific situation. By the time a business would be perfect for a specific situation, conditions would change.

You could fail by using whatever standards were good for highly successful retailers.

You need confidence in yourself & the situation you're building. If you think you don't have enough resources, your lack of confidence could work against you.

A balance of working on & working in a business is necessary. Working on a business should start before it's launched. Yet until a business is started, it's just a theory. Eventually, optimal work on a business requires results that are analyzed.

It may be helpful to have experience in retail & with product categories, but it depends on the experience.

Doing the wrong things & learning can be more helpful than not knowing or admitting what went wrong. Not knowing about or refusing to admit mistakes could be a problem with pride.

People may be confident & competent because of successfully doing the right things for years. That thorough experience could be unhelpful now.

Dealing with paradoxes may be frustrating, but necessary.

Dennis S. Vogel
thrivingbusiness@email.com
Optimal marketing is vital for your business & customers.
Optimal marketing helps consumers get more of the benefits
they want & need to live optimally.
Please click here for free information.
http://www.lakefield.net/~thrivingbusiness/

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Replies:

Subject	Author	Date
It's All Competition, All The Time	Dennis S Vogel	23:17:43 12/31/14 Wed