Why places close.
It happens to all of us. You travel to your favorite place of business and arrive to see the place shuttered. Another shop closed. How did this happen? Sometimes we can see it coming, but other times it comes as a complete shock, tragic and disheartening. This year alone, two of my favorite products stopped being made. My favorite hot pepper jam, because the company apparently folded. The website says online items are all out of stock, the phone call I made went unanswered to voicemail, and the owner was absent at a local food festival. Just this week, I went online to order a few cases of this awesome specialty iced tea, not sold in stores. I always order six to twelve cases at a time, extra of the diet blueberry flavor. I was devastated to learn that Two If By Tea had been discontinued due to rising production costs.
As upsetting as it may be for us, often it is many times worse on the owner of the business because although we were loyal patrons, the business was their brainchild. What do you do when your dream dies?
The reasons why places shut down are as varied as the businesses themselves, but there are often several main reasons business close.
Declining customer base.
The first espresso bar to open in Lancaster PA was The Monk’s Tunic. It made the local newspaper. (That local newspaper has since folded also.) When you are the first business you often inspire imitators. Competition for customers is often fierce when several shops of the same type open in close proximity. Customers are the life-blood of a business, and losing too many customers will kill a business. Although it is speculation on my part, I blame the press release, because within the first year of business, at least a half dozen similar cafes opened all within two blocks of each other. That same newspaper article also mentioned a national bookstore chain that was opening at the mall, BORDERS BOOKS which would have a sit down espresso bar.
Why do I blame the newspaper? Think of the California Gold Rush of 1848 which brought over 300,000 prospectors to California when newspapers announced gold had been found at Sutter’s Mill. Here was the local newspaper proclaiming the discovery of ‘Black Gold’ in the city.
I did manage to visit all of the cafes which opened during the ‘Great Espresso Rush’ to sample their drinks. I’m a coffee snob, so it takes more than just what’s in the cup to leave an impression on me. The ones that offered poetry readings and live music often brought me back rather than the coffee, all of which tasted pretty much the same. They must have all been using the same local roaster. The Monk’s Tunic put up a valiant fight, outlasting all of the newcomers except BORDERS, which in turn folded a decade later. Each of these shops were unique in their own ways, but I really miss both The Monk’s Tunic and BORDERS the most.
Location, Location, Location.
Where you sell your goods is often as important as what you sell. Unless you sell a highly coveted item and have a rabid fan base clamoring for it, customers will not usually go out of their way to visit your establishment. A highly visible location with vibrant signage and easy access and exit are key. If your customers can’t see you easily, or get to your shop, they won’t stop and just pass on by. And don’t forget about parking, no one wants to fight for a space, or pay to park just to go to your store.
Most new construction in the USA conforms to Americans with Disabilities Act standards. The ADA sets standards for construction of accessible public facilities. However, if you buy an older property built prior to the establishment of the ADA to house your business, you may need to make modifications. This can include ADA bathrooms for customers, a designated check-out counter space set lower, designated seating and parking for disabled people, ramps, and even wider doors in some cases to accommodate wheelchairs or motorized carts. Depending upon the modifications, this can be quite costly.
When I was a young boy, I used to walk two extra blocks to a small grocery store to buy Pepsi for my aunt, because it was a nickel cheaper per bottle. The store was run by an old man. Two weeks in a row I went in and he was out of Pepsi, and I had to go back to the bigger grocery. So I stopped going to his store for a few weeks. Sometime later, I went back to his shop, and there was one six-pack of Pepsi so I brought it. As I was walking out, I heard the old man grumble angrily to himself how ‘the boy doesn’t come in for weeks, then buys his last six-pack’. I NEVER went back to that store again.
You and your employees are the face of your business. A customer should always feel like you appreciate their business, not like you are doing them a favor by being open. Staff should be friendly, courteous, clean, identifiable, competent, and well versed in your product. Your employees may be well extremely versed, but NO ONE should know more about your business, or be more skilled at it than you. You should be easily reachable by both staff and customers to solve problems that your employees may encounter. Yes, there are SOME high-maintenance customers who think the world revolves around them, but they are the exception, not the rule. I try very hard to be nice to ALL my customers, including the ‘difficult’ customers. IF you have a ‘difficult’ customer, it may be necessary for you or a trusted high-level employee to personally deal with them. By isolating this E.G.R. (Extra Grace Required) customer, you are protecting your staff from them, and vice-versa.
Word of Mouth.
Do your customers rave about you and your shop? Do they leave positive reviews on social media? Do they even know you exist at all?
Thirty years ago, most people looked up businesses in the Yellow Pages phone book. They saw advertising on TV, in magazines, newspapers, and on bill boards. Reviews were often by word of mouth. Today however, social media is the main go-to. It is very important to have an online presence. Although I am still in the process of trying to establish That Coffee Place, I do have a Twitter and a Facebook page already established. Both have been dormant for years waiting for my brick-and-mortar location to open someday. When it does, I’ll probably expand my online presence to Yelp! and Trip Adviser, as well as Google. When that does happen, positive reviews will be very important. One bad experience at your place of business can be all it takes for a disgruntled customer to leave a negative review online which can harm potential sales.
Incompetence and mismanagement.
The saddest reason a business can fail is because the owner failed to do their homework. There is much more to opening a shop than signing a lease and hanging an OPEN sign. As the owner of your shop, you need to know everything there is to know about your business and the location BEFORE you even open the door. I know of a struggling pizza place that is barely keeping its lights on because they opened in the same ‘Turn-Key’ location as FIVE other pizza places before them, all of which folded. In the same little strip mall, there is an empty restaurant which was a ‘Turn-Key’ restaurant that in the last seven years had 3 different Spanish restaurants, 2 African restaurants, and a Jamaican restaurant. Just because it’s a ‘Turn-Key’ location selling all the necessary equipment and furniture included with the lease does NOT mean it’s a great place for a restaurant. There often are very good reason these shops closed.
The neighborhood changed.
When you’re surrounded by a large population of very poor people on public assistance, these people do not dine at restaurants often, if ever. When a neighborhood goes into decline, litter, graffiti and crime increase. This alarming trend often discourages patrons from more affluent areas, who tend to avoid such slums and favor more inviting places.
Not having a well-lit attached parking lot with adequate spaces will discourage patrons.
What you’re selling may no longer be desired.
You can’t pay people enough to stay, or find good help.
You ran out of working capital and are robbing Peter to pay Paul. No Ponzi scheme on Earth will keep your Money Pit open long term.
Health Issues and Retirement.
No avoiding it, we will not be young and healthy forever. Everyone one of us will grow older, feebler, and eventually die. When this happens, we are often forced to downsize, and this will also include either shutting down, passing on, or outright selling our businesses.
The Pancake Farm in Ephrata PA will be shutting its doors in eight weeks on December 1st, 2018. The owners are retiring. The business has been these since 1960, and owned by them since 1982
The owner of The West Reading Diner sold the business to his son, who re-branded it as The American Diner.
After decades of business, my guitar teacher Ken Rohrbach shut down Ken’s Music Studio on 10th St several years ago, and retired. We all have our strengths and weaknesses. I may be a coffee expert, but I’m no guitar player. I could probably earn a fortune standing on a corner asking passers-by for tips for me NOT to play my guitar. Just goes to show, pobody’s nerfect. As always, I wish success and happiness!