Sunday, July 27, 2008

Muddling through or....

...who's going to save us now?

I am not talking about my store. I'm actually ahead of last year this month, at this point. So far I've been close to beating last years sales 3 times before, only to fall back in the last few days of the month. Because of the sequence of days (slowest vs. busiest) I sort of expect that to happen again this month.

But that means I've come very close to beating last year, ending up just slightly below, 4 out of 7 months. Meanwhile, because I'm not building my inventory this year, my profits have been much better. The other 3 months frankly sucked.

So....what's happening?

As I said a couple of days ago, I was all ready with a theory and then had a huge sales day. But in reflecting on it, I think that 'huge' day just reinforced what I was going to say.

Don't anyone snicker at me -- but I think the 'events' have had a beneficial effect on my sales this year.

What!?

Well, I've always maintained that events are useful when times are slow. I've always said that the events in the 'off' season are useful. What I was objecting to was closing the streets and distracting my customers on peak weekends and hours when we would have sold a bunch without any help.

Well, based on what I'm seeing this year, every season is an 'off' season.

If you are a retailer in Bend, and you don't make money in July and August and December -- you probably don't make money. My regulars seem to have cut back, resulting in their paychecks not stretching to the end of the month and thus that tale-tell drop off in the last week. And I don't believe the tourists are coming in the numbers or are as willing to spend as in the past, thus necessitating the 'events' and the excuse to open their wallets.

It's not a good sign when businesses are closing in the peak season....

So what are we depending on to keep the retail market humming? It seems to me that we are a little too reliant on the inexperience of new businesses, who from what I can see, don't know the Bend cycles. They tend to open at the wrong time, for one thing, often completely missing the busy season.

And you just have to wonder about the judgment of someone who would open a restaurant in Bend right now. Or a dress shop. Or a jewelry store. Or any of the other high end businesses.

Oh, I know what happens. Each new store thinks they're unique, that they have it down.

But like anything else, it makes sense to play to odds rather than believe you are going to beat the odds.

If there is an average of one independent bookstore nationwide for each 100k in population, then it seems.....very brave to open in a county of 100k that already has 6 bookstores, plus Barnes and Nobles. Seven if you stretch the definition to my store.

But notice how non- 'sexy' businesses, such a shoe repair, or used bookstores, or ....even comic shops are represented by just one or two; indeed, I've lost most of my single competitors in the last year or so.

But if they want to do it, why not let them? Why do I want to stomp on their dreams?

Hey, they may indeed have a new idea, or just be better at it than anyone else.

But if you were reaching to put your hand on a hot stove, I hope I would warn you.

There are real life consequences to opening a business. You could lose your shirt. Hell, based on the odds you will lose your shirt. Be sure that you have another shirt in the closet.

There have been a few suicides in this town because some people went 'all in', doubled down, bet the farm. And lost it all.

RDC was saying that I just complain and grumble. I joked back that complaining and grumbling and bitching and moaning were what blogs were all about. If you have all the answers like RDC you aren't going to tell us, are you? No...contentment writes a blank page. So I agitate, respectfully, that there are dislocations in the business climate in Bend. Probably just as out of whack as the housing was.

So....what happens now. Do we muddle through?

This is where I take a step back and say: if the spaces on Greenwood haven't been leased by now, what do future tenants have to look forward too? The normally slow fall, one good month in December, and then that long drought between January and July.

If, as seems likely, the housing prices don't stabilize, and we continue with this 25 building permits per month average, I foresee a lot of pain ahead.

5 comments:

eyepublius said...

Somebody on BendBubble2 is saying 38 Degrees in NW Crossing has closed. True?

Duncan McGeary said...

Yeah, I mentioned that in my blog yesterday, only I just said "a restaurant in Northwest Crossing."

It was announced in the paper, yesterday, I believe.

Duncan McGeary said...

For long time Bendites, the Bluteal closing would seem more significant.

Yet another 20-30 year old business closing. At this rate, I'll be the last of the old timers...

RDC said...

Duncan,

You should at least keep my statements in context. My reference to your complaints and grumbling was in relationship to you credit card and bank dealings. Where you could take action and instead choose to grumble and complain about it.

While I am certainly in agreement with you concerning the down turn, I may not agree about business startups.

A down turn can actually be a very good time to start a business:

1. A startup usually takes a year or two to get going anyway. Starting one during a down turn puts you in a good position when the cycle starts to turn upward.

2. Costs tend to be lower in many areas in the back end of a down cycle. (Bend is not there yet)
(rents, labor, etc.) also better availability.

3. Ability to start out at a slower rate and get a better handle on the business, instead of starting one at the peak where you are rushing to keep up and mistakes are more costly.

4. Ability to build the brand and grab market share at lower costs. If others in the space are failing or concerned about expenses they are not concetrating on building their brand or grabbing market share they are just worried about survival.

5. If you can make a lean business that can survive in a down segment, you will probably due quite nicely during the up cycle. Starting and doing well in the up cycle does not necessarily mean that you will survive the downturn.

In my view during an up cycle you should be planning and preparing for the next down turn to make sure that you can take advantage of it, not just survive it.


Up or down cycle the key is the selection and planning of the business. I tend to like service business, such as automotive services and repair myself. They tend to do very well during down cycles (oil change, tune-up, tires, car wash, etc.)

Duncan McGeary said...

Had to tweak you a little, RDC.

About start-ups. I agree with every single point.

But you are at least a couple of steps ahead in thinking and planning than any Mom and Pop business I've ever heard of.

Most start at the top. Most start businesses that are well represented. Most spend too much on infrastructure. Most overspend trying to burst full blown upon the scene. Most aren't willing to start small, make their mistakes when they aren't so costly, and wait for the up cycle, plan for the down cycle and so on.

I think maybe you have to experience AT LEAST one up and down cycle before you learn this.

It may be in a book or the best advice of someone like you or me, but I doubt many are listening.

And like the housing prices, we're still fairly far up the downside of the curve to cash in on the savings. Another year or two away....at least.

The only point I don't agree with you, here, is that most Mom and Pop business need to at least break-even pretty close to their beginning.

Which really means their "break-even" or what they need to live on, had better be pretty low.

Cheers.