Mar 9, 2014

Opening a Second Store? Do Your Homework

When the ghost of Jacob Marley visited Ebenezer Scrooge on that Victorian Christmas eve, Marley was dragging chains representative of the mistakes he had made in his life. Small business owners – especially retailers – do the same thing. We drag our mistakes around year after year until we become accustomed to them. We feel that their weight is a normal part of doing business, and we don’t recognize how much they drag us down until we are shed of them.

We drag chains made of excess inventory, debt, employees and unproductive locations.

All of these chains are difficult to get rid of. The solution to the problems they create can be compared to quitting cigarettes: It’s better to not start at all. But, a generation ago, teens would start smoking because it was cool and available. As small business owners, early successes boost our egos and we crave more success. We say: “If I can make ‘$xx’ profits from one store, I can make twice as much from two stores.”

It’s an easy trap to fall into; I fell into it myself. I bought my first store while in my mid-30s, and quickly tripled sales and profits. I thought I was a genius. So, I bought a second store, and then a third. The profits didn’t double with my second store, or on the third. But my workload and troubles easily tripled. Nevertheless, I carried those troubles year after year, just like Marley’s chains, until I figured out a way to shed them.

Once away from them, I could look back and clearly see where I made my mistakes. There’s no teacher like experience: It gives the test first, and the lesson afterward.

It’s a rare occurrence when a second store is as profitable as the first. Read More...

No comments:

Post a Comment