Wednesday, November 12, 2008

New stores everywhere....

I'm absolutely fascinated by the number of new small stores opening in Bend. And at a bit of a loss to explain it.

Human endeavor is wondrously messy and unpredictable.

People do what people do. Open stores. Because they want to.

I suppose that it's good for my store to have so many new openings around it. I've always maintained that almost all stores can last 2 or 3 years; so this may just about bridge the downturn in the local economy. Any sign of brisk activity is good for the existing stores.

I'm convinced that most of us have seen a 20% drop in sales; I'm currently running about 12% down for the year, but that figure is probably going to get worse. At the same time, this has been my most profitable year; all debt paid off, current on bills, savings untouched, taxes paid in full and on time.

As I keep saying, as long as you are over your 'break-even' point, it almost doesn't matter how much you gross, it matters how much you spend. You make just as much money at 20k with 50% margins as you do at 30k with 33% margins. As long as you can manage that, your bottomline should be safe.

It's not as fun to be more careful and circumspect. I've always enjoyed the growth phases because it allows me to experiment, play around, try new things.

But the phases of being more disciplined have also been satisfying; you know, that feeling of satisfaction of being inside a warm house while the storm rages outside.

What has surprised me and gratified me, is so far even on the slowest of weeks, I've had enough to pay bills on time.

The difference this time, I think most of all, is that I don't have any debt. The debt burden in past slowdowns was horrendous. That, and the fact that I pushed sales so much above the 'break-even' point in the last growth phase (roughly 2002-2007) that I can sustain a substantial drop in sales without any danger.

I guess all it takes is 25 years of ups and downs, and hanging on by my fingernails for years, and just steadily chipping away at it.

5 comments:

BENDBUST said...

Dunc,

During the 1983 in ORYGUN it was the peak of entrepreneurial-ism in history before my eyes.

So many people get laid off no work what do you do??

1.) LEAVE
2.) Work for less?
3.) Start your own business?

Hell, even you yourself bought in 1986 well before things got better,

It's NEVER the end of the world, if people want to stay in BEND, they MUST start their own business, there never has since mill days and never will be jobs here.

Just something to think about in regards to your rhetorical question.

I do agree though 'stores', I mean with credit card going away, ... on the other hand pawn-shops, and 2nd used baby clothes, strollers, ... people are really pooping out the baby's its quite normal during depressions, the young spend more time at home, .. more baby's, new parents will always spend their money on their children first, a good entrepreneur is always thinking along these lines, ..

there are lots of genres that people can do, Bend has the critical mass,

Jeff said...

It's nice to hear how simple your business model is. It's such a stark contrast to all the complicated accounting being done nowadays by corporations.

One marvels to read of all the tricks accountants do to keep the money flowing. They perform magic tricks to make a company appear solvent, just to keep the operating loans coming in.

I'm far removed from the world of accounting, but I would imagine that right now there are a lot of accountants being asked to pull a rabbit out of a hat.

BENDBUST said...

But the phases of being more disciplined have also been satisfying; you know, that feeling of satisfaction of being inside a warm house while the store rages outside.
*
I don't care anymore, but I concur, when I was young I was fascinated when times were good I could play and money just rolls in ( when having your own biz ), and when times were bad, I would simply work 10X harder and things always worked out.

I learned to take long vacations, and enjoy free time during the UP bubbles, and work 12hr days and not spend during the down bubbles.

I always got more done during the bad times.

During good times you can be a ninny and your biz will not die, but during hard times, if you work 10X, and watch your money, you can always survive.

Like the great depression hard times teach people how to survive when it gets bad, go through a few cycles, and you'll be fearless.

Again, out of a job? Start your own business.

I expect to see lots of entrepreneurs doing some real interesting stuff in the coming years. The last ten years you could be lazy and not care, but now that will not work in any business.

It's a great time, like Warren Buffet say's when the tide goes out you get to see who is naked.

During good times you can show asshole customers the door, during bad times its critical to be nice all the time. If it were always the same, nobody could survive luckily these cycles seem to happen every few years.

Most people I know who are CPA's seem to think that OBAMA will flood the low end with cash in 2009, just stay the course, and cut your burn rate.

nathan said...

The best position to have, in these economic times, is one where you don't have debt collectors.

Congrats!

-Nathan Dayton

BilboBend said...

One marvels to read of all the tricks accountants do to keep the money flowing.

*

Any small business can only do what is called 'cash accounting', e.g. if cash ain't coming in the door, you don't spend.

One of the reasons that CORP USA is deflating it that debt has been piled up for years, like GM, FORD, .. they all have negative net worth. Ditto for many people.

Look at our own city of BEND, Friedman&Johnson both CPA's have been teaching our city-hall how to play funny-books for years, now its a house of cards ready to implode.

Cash-Accounting isn't rocket science, but funny-accounting takes lots of brain power.

It all depends the goal, most small business just wants to survive, most big business, city's just borrow and spend, until their credit is gone, and then they're gone.

Dozens of Bankrupt city's in CALI, and the wave is coming to Oregon.

Today the city can't borrow to feed the general-fund, but they can borrow for infrastructure. So they borrow tens of millions for Juniper-Ridge, and then pass the money back to the general-fund. One of the ten principals of JR is NOT to Bankrupt the City. The trouble is the city is without principal.