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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.

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.

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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.

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