- Real Estate
- Food & Drink
Feb. 24, 2019
For many reasons, this is my least favorite time of year.
I’m not a fan of the temperatures, the lack of daylight or the inevitable business closure stories I know we’ll have to write.
For many businesses, local and national, the first quarter of a new year means assessing whether it makes sense to continue operations. They’ve taken advantage of whatever boost holiday shopping brought, leases often are up, and it’s decision time.
I always try to be sensitive in covering these closures. Especially now that I have my own business, I’m acutely aware how difficult it must be to decide it’s time to let go of one.
When I know ahead of time, I suggest to business owners that, if at all possible, giving a little notice of a closure is a good thing. Your customers often want a chance to give you their business one last time. It’s the humane thing to give your employees time to process it too.
And just as much as I can count on the closures themselves, I know what the reader reaction will be. Generally, people are sad. Often, they say they wish they had patronized the business more or wish they’d even known about it. There’s sometimes an outcry against online shopping and conversation about what more can be done to support buying locally.
Every situation is different. But in covering more final days than I would have liked, a few reasons for business closures stand out to me. I share them with the hope that maybe there will be fewer this time next year.
This is about as basic as it gets, but if you are in the business of selling a product or service, there has to be a market for that product or service.
With retail in particular, I believe the Sioux Falls market has become more competitive in recent years. Whether your business sells apparel, accessories, food, household items, luxury items, even pet items, your product has to stand out somehow. It has to be unique, has to offer value, has to be more convenient, has to be more memorable, more durable, more delicious, whatever your niche happens to be.
But it can’t be average. And it definitely can’t be below average. The market likely just won’t support it, and the business likely won’t last. There are way too many options for any commodity you can think of, and the internet ensures that’s only going to increase.
Increasingly, the same goes for service-oriented businesses. I always smile a little when I ask businesses what differentiates them or what their niche is and they tell me it’s their great customer service.
I’d say that needs to be a given in today’s market, not a differentiator. And maybe our standard for what outstanding customer service is needs to be raised a bit too.
The differentiator, at least for now, is more like the customer experience. That’s a whole other column and more, but the businesses that create a powerful experience can forge a bond with their customer that supports sustainability.
I can’t overstate the importance of deciding where to locate your business, especially if you rely at all on public traffic.
It’s among the first questions I ask for an article about a new business: Why did you choose your location?
The answer tells me a lot about the business’ prospects for success.
I have seen extraordinary products overcome average or even below-average locations, but that is not the norm.
That’s why it is so important to use professional expertise when you’re selecting a site. We have a tremendous community of commercial real estate brokers in Sioux Falls. They can help you understand opportunities and limitations of different locations, help you work through your space needs and the financials involved, and unearth opportunities you aren’t going to find just driving around.
You need to be aware of factors such as traffic counts, co-tenancy, income levels and development plans for the area you’re considering before signing a lease or buying a property. The right site can draw customers and act like a perennial billboard for your business. The wrong one can cause you to overpay, be located on the side of the road that disadvantages you or land you in a neighborhood that isn’t capable of supporting your business.
Think of it like choosing where to live – only probably with even bigger financial ramifications. If at all possible, don’t settle when it comes to your site. Wait for the one that is going to help set you up for success.
Here’s the truth about owning a business: It is not for everyone.
And that’s completely OK. We need many more people working in businesses than we do people owning businesses.
But sometimes, owners don’t fully recognize what it’s going to take to run a business until they’re already in it.
I know I didn’t. I figured I would be busy, and I was used to being busy, so that didn’t deter me. I didn’t grasp the time commitment involved, however, until I was actually doing it.
And even if it is a fit for you in one stage of life, it maybe isn’t a fit in every stage of your life. Maybe your model demands you be in the business more than you’re able to balance given other things you need or want to prioritize.
I’ve seen businesses close in spite of what I suspect were healthy balance sheets simply because the owner chose to move on.
In those cases, I sometimes wish the owner might have considered selling the business instead of closing it.
We’ve seen a few instances where that has worked out well for both the buyer and the seller as well as the marketplace.
I know it’s hard to think about handing your baby of a business over to someone else, but if you consider what it means to your customers and the potential you have to positively influence another owner’s life, it might help you decide to let your company live on.
And while we as a community can’t do much to affect the decisions of national or international companies located here, we definitely can and must continue to do our part to support those who own their businesses locally. That’s especially critical in the remaining winter weeks, as this season has been hard on sales for many businesses.
With that in mind, spring is finally almost in sight, and we’ve already announced several new businesses coming to Sioux Falls this year. There are more ahead too. Let’s show up, spread the word for them and give them the best start possible.
It’s the season of business closures, and while each has its own story, there are some common themes behind them.