7 February 2015
Some friends of mine went out of business today. Here’s why I’m delighted.
Here’s a nice lesson in how to shut your business down. This story is about a couple who started a small boutique retail business. It was a second income opportunity for them; it may or may not have been a passion of theirs. As I recall the story, some friends of theirs opened a similar type of business, and encouraged them to do the same.
They had a very cute storefront, and started running social media promotions. I got to know them when I stumbled across their store, looking for a last minute Christmas gift for my wife. I was also a fledgling small business owner, so I chatted them up about how they got started. We became friends before long.
My own business went through its early ups and downs, while theirs seemed to following a “slow but steady wins the race” trajectory. I continued to shop from them, and observed with more than a casual interest what steps they took to build their customer base and grow the store.
I had always heard, “Get through Year Two, and you’ll be alright”, as a mantra for the small business startup. Both of our businesses hung in there for the first two years, but in the middle of Year Three my business suffered its final setback. Meanwhile, my friends passed their second anniversary in strong shape.
Imagine my surprise, then, when the announcement came across my Facebook feed that they were having a Going Out Of Business Sale. How could this be? Everything seemed so rosy for them? I was bummed on their behalf, because I knew the pain of a failed business venture, and I was sad to think that they were living the same pain.
I stopped by the store one last time to buy some things and offer my condolences. Turns out, I had it all wrong. Yes, they were going out of business, but not for the same reason I did. Their choice to close was driven by business strategy, rather than hardship and bad luck.
You see, the retail climate in the little shopping district where they operated was changing. They noticed a recent downturn in retail traffic that coincided with a change in store hours for another business that brought a lot of shoppers into the vicinity. Other storefronts on their street had already felt the pinched, and had closed or moved. They could see the writing on the wall for them.
Rather than fight what was likely to be an insurmountable hurdle, they made the decision to close their store while they were ahead. It was unlikely that the success the experienced in their first three years of operation could continue in the next year, with the changes in the local business climate over which they had no control.
The conversation finished as a congratulatory and celebratory one. I realized they had won the game. They started a business, made it profitable, and exited while they were ahead. It was a great lesson for me, and a reminder that businesses come and go, and that the closing of a business is not always a bad thing. There’s a right time to shut your business down. I’ll take that lesson with me as I consider my next business venture.