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(Vox)   For many small businesses owners, COVID 19 can kill you twice   (vox.com) divider line
    More: Sad, Business, Small business, American small-business owners, economic importance of small businesses, Small Business Administration, have biases, small businesses, public health state orders  
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928 clicks; posted to Business » on 24 Jul 2020 at 10:21 PM (8 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



10 Comments     (+0 »)
 
View Voting Results: Smartest and Funniest
 
2020-07-24 7:29:08 PM  
Again...I had a consult business years ago for restaurants. Help with inventory, labor, running through the licensing hoops, menu planning, marketing strategies, concept, target markets, and the like.

I quit that. My partner and I were pretty good at it, and pretty much the businesses that we guided through their opening process were around until their owners decided to pack it in and retire or pass the business on to their kids. The difficulty was most of our clients didn't call us when they were starting out but called us when they were already in trouble. And I got really tired of having to tell people, after looking at their books and their business that they needed to close. Now. Right now. And file to protect as much of their assets as possible, and see what they could sell off. It's heartbreaking to have someone clutch at you for a lifeline, and you have to tell them, "Your dream is dead. Go home. While you still have one."

I'm not sure what the failure rate for other small businesses are, but restaurants, it's been actually fairly steady in that MOST restaurants will fail in their first five years, and most of those in the first two. You get past the five year mark, you generally have a handle on things, but it's still a dicey proposition, since, at best, you are looking at maybe 10-15% profit. Maybe.

Most small businesses fail. Most from a failure to secure operating capital for those first two years. You need to go in WITH your costs covered, and when you make a profit, you squirrel that sh*t away. You pay yourself a modest salary, you either sweat your ass off working, or you pay someone who is better than you to take care of details you can't, and you SWEAT the details that you can cover. It isn't glamorous. There's a reason why family businesses do well, because you keep it in the family, and you viciously exploit your kin to keep the costs down. A lot of folks...they start to get revenue coming in, and then they get ideas about improving things before they can nail down their target market, and wind up spending their nest egg on piffle, and when bad times show up, or unexpected costs, then suddenly...because they don't have those operating funds, they get into trouble, and they lean into that kitty from their first two year profits, and suddenly THAT isn't even the operating capital, and then you're scrambling.

This model isn't just for restaurants though. You see this in retail as well. And yeah, it's sad. But in all honesty, COVID or no, a LOT of businesses that are going under? They'd be going under anyway. It's sad when you see folks who had their sh*t together realize, "F*ck it. We have our retirement, why not just...go?" But a lot of the businesses that are struggling...they just got put out of their misery early because they did NOT plan well for their first few years of operation.
 
2020-07-24 8:14:41 PM  
Good article subby. Thanks.
 
2020-07-25 1:23:16 AM  

hubiestubert: Again...I had a consult business years ago for restaurants. Help with inventory, labor, running through the licensing hoops, menu planning, marketing strategies, concept, target markets, and the like.

I quit that. My partner and I were pretty good at it, and pretty much the businesses that we guided through their opening process were around until their owners decided to pack it in and retire or pass the business on to their kids. The difficulty was most of our clients didn't call us when they were starting out but called us when they were already in trouble. And I got really tired of having to tell people, after looking at their books and their business that they needed to close. Now. Right now. And file to protect as much of their assets as possible, and see what they could sell off. It's heartbreaking to have someone clutch at you for a lifeline, and you have to tell them, "Your dream is dead. Go home. While you still have one."

I'm not sure what the failure rate for other small businesses are, but restaurants, it's been actually fairly steady in that MOST restaurants will fail in their first five years, and most of those in the first two. You get past the five year mark, you generally have a handle on things, but it's still a dicey proposition, since, at best, you are looking at maybe 10-15% profit. Maybe.

Most small businesses fail. Most from a failure to secure operating capital for those first two years. You need to go in WITH your costs covered, and when you make a profit, you squirrel that sh*t away. You pay yourself a modest salary, you either sweat your ass off working, or you pay someone who is better than you to take care of details you can't, and you SWEAT the details that you can cover. It isn't glamorous. There's a reason why family businesses do well, because you keep it in the family, and you viciously exploit your kin to keep the costs down. A lot of folks...they start to get revenue coming in, and then they get ideas about improving things before they can nail down their target market, and wind up spending their nest egg on piffle, and when bad times show up, or unexpected costs, then suddenly...because they don't have those operating funds, they get into trouble, and they lean into that kitty from their first two year profits, and suddenly THAT isn't even the operating capital, and then you're scrambling.

This model isn't just for restaurants though. You see this in retail as well. And yeah, it's sad. But in all honesty, COVID or no, a LOT of businesses that are going under? They'd be going under anyway. It's sad when you see folks who had their sh*t together realize, "F*ck it. We have our retirement, why not just...go?" But a lot of the businesses that are struggling...they just got put out of their misery early because they did NOT plan well for their first few years of operation.


"It's only property."
"They have insurance."
"They underpay their employees. They deserve to fail."
"PPP is there to enrich business owners."
"They can afford to stay closed."

Sorry sir, your real world analysis is not appreciated here on Fark. We prefer to speculate on what business owners are like.
 
2020-07-25 1:33:10 AM  
A hundred miles southwest of Albuquerque and 235 miles east of Phoenix, surrounded by nothing but the blue sky and the red expanse of the desert, Pie Town

Sure, it's the coronavirus that killed this bakery.
 
2020-07-25 2:11:16 AM  

OneCrazyIvan:
"It's only property."
"They have insurance."
"They underpay their employees. They deserve to fail."
"PPP is there to enrich business owners."
"They can afford to stay closed."

Sorry sir, your real world analysis is not appreciated here on Fark. We prefer to speculate on what business owners are like.


No kidding. I've owned several small businesses to varying degrees of success and all my attempts to explain to other farkers what it's about meet with those kind of excuses/insults.

The most infuriating is 'if your business failed then you must have been bad at running it.' STFU loser who has never tried anything in their entire life.
 
2020-07-25 2:13:30 AM  

HempHead: A hundred miles southwest of Albuquerque and 235 miles east of Phoenix, surrounded by nothing but the blue sky and the red expanse of the desert, Pie Town

Sure, it's the coronavirus that killed this bakery.


No, actually it's a famous bakery that people travel that far to get a slice of pie from. A google search will confirm if you're still skeptical.
 
2020-07-25 2:20:20 AM  

HempHead: A hundred miles southwest of Albuquerque and 235 miles east of Phoenix, surrounded by nothing but the blue sky and the red expanse of the desert, Pie Town

Sure, it's the coronavirus that killed this bakery.


Apparently they also had big events in the town that brought in a lot of periodic business. That was also likely killed by Coronavirus, at least for this year.

The experimental pear ginger pie sounds delicious.
 
2020-07-25 12:36:38 PM  

wax_on: OneCrazyIvan:
"It's only property."
"They have insurance."
"They underpay their employees. They deserve to fail."
"PPP is there to enrich business owners."
"They can afford to stay closed."

Sorry sir, your real world analysis is not appreciated here on Fark. We prefer to speculate on what business owners are like.


No kidding. I've owned several small businesses to varying degrees of success and all my attempts to explain to other farkers what it's about meet with those kind of excuses/insults.

The most infuriating is 'if your business failed then you must have been bad at running it.' STFU loser who has never tried anything in their entire life.


You can take comfort in the fact that losing a business to bankruptcy isn't a big stigma in the US necessarily.  I lived in Europe for a while and there was a high bridge in the city over pavement.  There would be a few suicides a month by former executives and bankrupted small business folks because you get one shot and the banks and investors will mark you for life.  It sucks, as many entrepreneurs often need to fail once or twice to get it right.
 
2020-07-25 4:14:54 PM  

hubiestubert: This model isn't just for restaurants though. You see this in retail as well. And yeah, it's sad. But in all honesty, COVID or no, a LOT of businesses that are going under? They'd be going under anyway. It's sad when you see folks who had their sh*t together realize, "F*ck it. We have our retirement, why not just...go?" But a lot of the businesses that are struggling...they just got put out of their misery early because they did NOT plan well for their first few years of operation.


I can see this in a small town I used to live in.

There is such a turnover in restaurants in that town.  even some notable franchises like Arbys, Krystal and the like.  A new restaurant opens, there is a honeymoon period, then it is over.  The town just cannot support X number of restaurants.  Even if a greasy spoon is quite supported, all it takes is some other new one to show up, split the patrons to where both struggle and it is a race to see who goes under first.

then some one else will buy the space, new theme, same cycle repeats.
 
2020-07-25 5:11:07 PM  

Hyjamon: hubiestubert: This model isn't just for restaurants though. You see this in retail as well. And yeah, it's sad. But in all honesty, COVID or no, a LOT of businesses that are going under? They'd be going under anyway. It's sad when you see folks who had their sh*t together realize, "F*ck it. We have our retirement, why not just...go?" But a lot of the businesses that are struggling...they just got put out of their misery early because they did NOT plan well for their first few years of operation.

I can see this in a small town I used to live in.

There is such a turnover in restaurants in that town.  even some notable franchises like Arbys, Krystal and the like.  A new restaurant opens, there is a honeymoon period, then it is over.  The town just cannot support X number of restaurants. Even if a greasy spoon is quite supported, all it takes is some other new one to show up, split the patrons to where both struggle and it is a race to see who goes under first.

then some one else will buy the space, new theme, same cycle repeats.


That was the hellish thing for our clients to understand. A few listened to us. We even helped a few find better locations, and find better markets. And most are still up and running today--or at least the folks who took over from them are.

Just because there are currently 76 restaurants in an area does NOT mean that it can support all of them. Heck, the town I'm currently in has eight restaurants, and three bars. That's the max. People keep trying to shoehorn in, and they do OK for their first few months, and then folks go back to their standbys. One place is doing OK, because it took over one of the elder joint's space, but it hasn't got Jerry, and I don't give it too long, because it's going for an upscale breakfast crowd for a town that just doesn't do upscale breakfast.

You have to look at the market. You have to look at the trends. You have to look at what is succeeding and what fails. And a lot of folks figure, "if I just do things REAL GOOD, they'll come." And they will. For a bit. But you'd better have a barstaff that clients recognize. You'd best have a waitstaff that the crowd already knows, and you'd best deliver on food and beverage in a way that no one else does, and more importantly, that people will CONTINUE to support.

We have a lovely little trattoria that opened in town. It's fantastic. Chef is great. Food is amazing. Wine list is not terribly expensive, but still solid. And they're likely to close their doors before the end of the year. Because while they will get folks from out of town to roll in, they don't see a lot of locals. And this town is tiny. It is a blip, and there is NoHo and Amherst and so many other great areas, they are pricing themselves right out of the market.

If they'd opened in Amherst they'd be going like gangbusters, because getting good Italian in that town is as hard find as bubble tea is easy. No, seriously. There are Sofa King many boba joints, it's not even funny. Not that I mind, but the Chinese kids are all at home, and UMass and Amherst and Hampshire are going to be weird to rely on soonish. Locals and faculty would KILL for a great little Italian trattoria. But, on the other hand, the licenses for alcohol are ridiculous in Amherst. And they're gated in a fixed number of liquor licenses, and even beer and wine licenses. Which is designed to KEEP folks out of the market. And it works. And thus, a great restaurant is run out of town so the established folks don't have to compete with anyone new.

I get why they chose South Deerfield, because of the costs, but they don't have the market for it. Sunderland would be the next town over, and they have a double the population, but nowhere NEAR the same median income. It's not easy to find a concept that you're good at, that fits the community and target market.

If this business were easy...well, then there wouldn't be a 90% failure rate...
 
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