Saving Small Businesses and the Small Towns That They Call Home
Nine years ago, American Express started the annual tradition of "Small Business Saturday". Sandwiched between Black Friday and Cyber Monday, the day is dedicated to supporting small businesses and their communities. But is one day out of the year really going to make a difference? After the dust settles from the stampedes to the big box stores on Black Friday and the virtual filling of the shopping carts on Cyber Monday, there really isn't a lot left on the proverbial bone for the small businesses on Small Business Saturday. With stores such as Toys R Us, Payless, Gap, and more either closing for good or downsizing, there doesn't seem to be a lot of good news for retail stores these days. The news is even worse for small retail stores in small towns. So to say that one day a year is going to mean the difference between a store staying open or a town surviving is really not living in reality. 50% of all small businesses fail within the first five years. Some experts say it's actually close to half that will close in the first year of business. For the small towns that are home to these small businesses, this lack of stability can impact revenue and make the town less desirable to consumers. Shoppers don't like visiting small towns and seeing empty retail spaces or falling in love with a store only to return to it being closed. But this scenario is playing out all over the country. Is there anything that can save small businesses and the small towns that they call home?
I don't really have the answer, but I can shed some light on the challenges that a small retail store faces in a small town. What needs to change is two fold-it involves the town and the locals being on the same page and committed to the same goal.
First the town needs to find a way to embrace change and outsiders while maintaining it's small town feel. The town leaders need to understand that making the town a destination is different than opening the doors to a flood gate of new subdivisions and the urban sprawl. That simple realization can begin the process toward growth. Creating the idea of a day get away and promoting it to the cities that surround it, will bring people who want to spend the day and spend their money. If the town just gears the town for locals, then the revenue source is limited. Most small towns don't have a population large enough to support multiple businesses especially specialty stores or boutiques. But it's those specialty stores, boutiques, and quaint restaurants that make the town, giving it that special feel. So promoting the town to those that will support those stores is a must. It's not to say the locals don't support them, but by themselves the locals are not enough.
The next factor is that the local population needs to understand the value of the businesses and the additional revenue they bring to the town. If you live in a small town and want paved roads, street lights, and police, you need outside revenue. Additionally, understand that affordable doesn't mean cheap. A small business cannot think small. Being cheap may mean initial profits, but long term it will be the death of that business. It might benefit the consumer, but the store will not survive-which hurts the consumer in the end. Case in point. The local antique store has to compete with another local antique store. They already price their inventory at a price to sell. Then enters Mister Consumer who wants to know "Is that the best you can do?" "Well we usually can come down a little" says the store owner- "10%." But multiply that by 5, 6, or 10 times throughout the day. Yes you may have made the sale, but the bottom line is impacted and ultimately the profit is eaten up. I have played that game so many times desperate for the sale. But if you stick to your guns, maybe you don't make anything that day. The dreaded "thank you for letting me look" is like a kick in the stomach when every sale counts.
I am all for a deal, but the next time you ask that store owner if that is their best price, remember that they are trying to make a living. Remember before they pay themselves, there is the mortgage or rent, the utilities, the insurance, employees, supplies, the cost of the inventory, and their time. That antique store isn't a non-profit that is getting their items for free. Most small antique stores can't sustain a barter system. One exception may be a large Antique Mall where the business model is rent space for premium money, charge a percentage, and start over again. If a Mall has 30 booths at $100 a space, that is $3,000 right off the bat without any sales. The owner's expenses are covered. (Rent is usually more than $100 and some malls have well over 30 booths). The commission is gravy and the owner doesn't care if the antiquer with the booth pulls a profit or not. If they don't and close up the booth, there is another one waiting to fill the space. But the small antique store has to sell a lot of $15-$20 items to pull that kind of profit. And if you barter that $15 item down just because you want a deal, then they have to sell a lot more.
My point is, if a store prices itself to please the locals, more than not it will end up pricing itself out of business. When I priced my vintage or antique items, I priced them knowing what I paid for them, based on their value, and what they were selling for at other places like ebay. I didn't over price. But I still had to battle the bargin hunter. Truth is-I did price it at my best price. Take it or leave it. And why should I sell that item to someone wanting a bargin so they can go sell it for more somewhere else-usually an antiquer without a brick and mortar and all the overhead.
Now put yourself in the store owner's shoes that is buying merchandise in bulk to sell-home goods, clothes, etc. They are paying for the items, shipping and handling. If they aren't big enough to deal directly with the manufacturer, they are usually dealing with a middleman and paying more for that product. The Wholesaler says you should be able to triple your money. Not in a small town. But doubling your money isn't enough once you subtract the price for the merchandise, shipping, and handling. Then count your time doing inventory, pricing, and stocking the floor. Doubling is like breaking even. And breaking even isn't making a living.
I really could go on about the challenges. But it comes down to the small town finding a way to keep that home town feeling while being inviting to the outsiders that will really spend money at the restaurants, stores, and attractions. The locals can't expect cheap. Cheap is different than affordable. Cheap is thrift stores and Goodwill. Not specialty stores. Recognize that specialty stores are the life blood of a thriving business community. Specialty stores can offer quality at a value, but not cheap. A variety in restaurants that appeal to all ages is a good way to get people to visit. Remember that the young ones are the future of the town. Don't alienate them or their ideas of what is appealing. Be willing to change with the times. But do it with a purpose. Have businesses that cater to locals and those that make the town a destination spot. But most of all make every day a "Small Business" Day.