Another Small Business Failure…

It’s no secret that most small businesses fail.

For those of us that have spent most of our professional lives working in, around and with small businesses it’s no surprise that small businesses fail.

Sadly, in my experience, most small businesses are doomed to failure before they are even started (I’ve also explored this theme in the post How To Start A New Business). Take for example a the new business I spotted in my local town this weekend. I spotted the business, or rather a notice in the window of a local failed business, noting that a new cafe would be opening there shortly, offering coffee and cakes. My first thought was “that’ll be gone in a year”.

So why do I think the business is doomed to failure? Well the here’s some things to consider:

• The previous business in that location failed – not always a problem, but if the business had similar characteristics to the new one it should serve as a warning sign. In this case the previous business was a retail business and in my opinion should act as a warning to the new business.
• The main issue however is the location which suffers from several problems:
• it’s several minutes walk away away from the town centre;
• there is no passing traffic – it’s not on a route to/from central car parks or any other venues that will attract passing traffic;
• it is quite visible from the main through road – which the owners probably thought was good – but as there’s no parking the benefit is unlikely to be there.
• The local town centre is in decline, the fact is most of us prefer to shop in the bigger towns that offer better town centres.
• There is a recession on and people are cutting back on the spending – luxuries such as coffee and cake are being cut back.

So what do you think? Will it fail? Am I wrong?

Photo by: fireflythegreat.

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• 1

  Hi John,

  I agree. Just around the corner from me the same thing happened. Now in that same store we have a coffee store that is doing quite well. They took the ‘coffee and cake’ model and added a small, but interesting point of differentiation. They opened up a day or two for special functions. Now, they are doing well… and have outlasted the last two businesses that were there.

  You see this thing all the time, it’s a mistake I have made before too. Something a little research could have prevented!

  Luke on September 3rd, 2009
• 2

  Location, location, location is the age old mantra that defines the chances a new business has of succeeding. It is also unfortunate that the old town centres are being driven to extinction by the shiny new shopping malls that are being built on the outskirts of town. I prefer to do business in an online environment, where you can create your own high traffic location.

  G Web on September 4th, 2009
• 3

  G Web,

  Yes there’s definitely something to be said for creating your own niche online.

  Luke,

  Sadly research seems to be something far too few small business start-ups do.

  John on September 4th, 2009
• 4

  well i am planning to start a business and i am doing a research and also goin to make sure i always reveiew my business plan and do marketing by making sure, people know about the business, making sure the customers are satisfied with it and thinking about what benefit discounts and special offers could bring

  bilkish on September 17th, 2009
• 5

  It always shocks me the little research people do – as said above, opening a shop in the location of a previous shop doing exactly the same thing that failed and when there are loads of other shops doing the same thing within walking distance. RESEARCH!!!

  Ben Wheeler on October 21st, 2009