Categories
Small Business

Why I Would Never Start a Bricks and Mortar Retail Business

Those of us growing up watching sitcoms like Friends have, at some time or another, had the thought of starting a cozy coffee shop. Running a local gathering spot, hanging out with customers who become friends, toying with decorating ideas and promos, picking the music playlist…it all sounds more like fun than work.

Central Perk Coffee Shops Are One Step Closer to Being a ...

Others have romanticized about boutique clothing stores, cannabis dispensaries, record stores and so on. The dream of opening a sweet little local spot sounds great, assuming everything falls into place. However, so many things have to go right in order for a bricks-and-mortar retail store to succeed.

The problem with physical retail is that you can have a great idea and a viable business but still fail.

==> A great business in a bad location will fail.

==> A great business opened off season or at the wrong time (e.g. when there’s road construction) will fail.

==> A great business not promoted properly will fail.

==> A great business with the wrong merchandise mix or pricing will fail.

==> A great business with weird hours will fail.

You get the point.

There are tons of ways a bricks-and-mortar retail business can fail, despite being a great concept. Of course, many of these problems are fixable over time. Unfortunately, the bills – rent, heat, hydro, staffing, etc. – don’t stop while you figure things out. Once the doors open, the countdown to bankruptcy begins.

Even if you luck out and successfully launch a bricks-and-mortar business, you’re still vulnerable to the changing physical environment. I’ve seen numerous local business collapse due to unexpected traffic changes, construction or criminal activity. The obvious wild card today is the lockdown due to Covid-19. The pandemic simply isn’t survivable for many retail business, many of which existed for years.

Sweep away all the negativity for a minute and let’s say you manage to build a profitable retail business that survives for years. Believe it or not, you’re still probably SOL over the long run. Once a retail business becomes successful, landlords see the opportunity and try to grab a share of the profits by raising rent once the lease is up for renewal. I’ve seen landlords triple rents on successful small business, squeezing every drop from the business. Given this, even the most successful bricks and mortar businesses are fleeting.

The few small retailers that actually last decades often own their physical location. Unless you’re a national chain, there simply isn’t any other way around it.

I love the flavour local retailers bring to a neighbourhood. I enjoy interacting with proprietors and supporting these businesses with my money. However, I warn anyone expressing interest in opening a retail business with a physical location. The chance of building something long term is so slim it just doesn’t seem worth the effort.

Edit (October 8th, 2020): As I was walking today I remembered another major reason I would never start a bricks-and-mortar business. You need to be there ALL THE TIME. Depending on the type of business, opening hours might be 10-12hrs daily. That’s 10-12 hours a day, sometimes 7 days a week you need to be present, regardless of how sick or tired you feel. Have a migraine? Tough. Want to take a vacation? Tough. Bricks-and-mortar retail needs boots on the ground, and if they’re not the owner’s boots it can get prohibitively expensive.

Categories
ETFs and Funds

How Can You Tell if You Should Pursue Your Business Idea?

You have a great business idea. Perhaps it’s something unique or something you’re particularly good at. How do you know whether you should invest in it or simply keep it as a hobby?

Adam Grant, Organizational Psychologist at Wharton, created the following graphic to help answer that question.

How to decide whether your idea should become a project:
1. Interest: do you think about it in your free time and bring it up in random conversations?
2. Importance: will it benefit others?
3. Contribution: do you have something novel to add?

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James Altucher – serial entrepreneur, author, podcast host – expands on this:

A) always good to have a couple of things going on at a time to see if they fall within the sweet spot of the diagram since so very few things do.

B) learn the skill of “experimenting” so you can take small steps with little downside and great upside to see what things “click”.

C) often something feels like it hits the sweet spot but then it stalls. Don’t be afraid to quit something that’s not quite clicking.

D) I always wait for my heart and mind to agree before I fully engage in a new activity.

Too often I did things for money that I did not love and too often I did things for my heart that had no other benefit to me.

The heart and the brain must be in agreement. Experiments helped me with that.

Example, I’ve spent the past 5 years doing standup comedy up to 20-30 hours a week. It’s not monetizable. But it added to my skills in podcasting, public speaking, ideation, etc.

But, mindlessly playing online chess for hours a day (which I am prone to do) is my heart talking but not my brain.

And starting a hedge fund way back when was my brain talking but not my heart. I hated every minute of it and not a good source of income ultimately.

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Categories
Small Business

Free Websites for Toronto Small Businesses

If you run a small business in Toronto, check this out:

Here are the details:

Leveraging Toronto’s technology community, the City of Toronto and Digital Main Street have brought together a range of partners to build and optimize online stores for Toronto’s independent businesses and artists at no-cost.

Thanks to volunteer developers, business students, and corporate partners, Toronto’s independent small businesses and artists can access ShopHERE to get their online store built and launched with hands-on support throughout the entire process in just a matter of days.

What do you get:

Choice of an online store customized with their information, branding, logo, etc.

Hands-on assistance setting up and launching their online store.

Training to support their online store, including topics such as digital marketing, shipping and inventory management.

Access to free tools to help support the launch of their online stores.

Here are the requirements:

Be a business located or artist in the City of Toronto that:

  • Pays commercial property taxes in the City of Toronto (rents or owns commercial property)
  • Have fewer than 10 employees or fewer than 25 employees if they are a restaurant or bar
  • Not be a corporate chain or franchise
  • Or must be an artist located within the City of Toronto

Learn more or sign up here.