Thursday, June 4, 2009

Comings and Goings update.

Got to work today, and there are big "Going Out of Business Signs" in the Luxe Home Interior's store.

I have theory. The second incarnation of any business will have less of a chance of surviving long term than the first incarnation.

The first incarnation is usually someone's dream. They put everything into it. The fixtures, the product, the attitude is as fresh as it will ever be.

The second incarnation is usually trying to pick up the pieces. Sure, they may have gotten into the same situation for less money, but....

1.) They have the evidence in front of them that the first incarnation, for all its loving care and energy and its new product and its New Kid in Town mystique didn't make it.

2.) They have the same hurdles of learning the business that everyone has, without the new business excitement.

3.) Picking up a store because it's available is very different in motivation from starting a business from scratch.

Of course, I have my own business to contradict that. I'd managed the store for a couple of years before I bought it, the absentee owner had really neglected it, and I brought a big sense of Newness in my attitude right from the start. But still, I was the second incarnation. It's more than possible that the management of 900 Wall is bringing the same virtues to their business, for instance.

P.S. Luxe has the distinction of being the first store both on the New business section and the goings section.


Mary Jane's 6/1/09
c.c.McKenzie 6/1/09
Velvet 5/28/09
Recession Pies 4/11/09
Bella Moda 3/25/09
High Desert Gallery (Bend) 3/25/09
900 Wall
Great Outdoor Store
Luxe Home Interiors
Powell's Candy
Dudley's Used Books and Coffee
Game Domain
Subway Sandwiches
Bend Burger Company
Showcase Hats
Pita Pit
Happy Nails


Luxe Home Interiors 6/4/09
Treefort 5/8/09
Blue 5/2/09
Volcano Tasting Room 4/28/09
Habit 4/16/09
Mountain Comfort 4/14/09
Tetherow Property 4/11/09
Blue Moon Marketplace 3/25/09
Plenty 3/25/09
Downtown Doggie 3/25/09
Santee Alley
Bistro Corlise
Made in Hawaii
Stewart Weinmann (leather)
Kebanu Gallery
Pella Doors and Windows
Olive company
Pink Frog
Little Italy
Pomegranate (downtown branch)
Pronghorn Real Estate office.
Speedshop Deli
Paper Place
Bluefish Bistro


RDC said...

You can build good businesses taking advantage of the bones (capital improvements) left behind by failed businesses. However, you need to expect that you will not be cash flow positive for 24-36 months and that the next 12-24 months is going to be pretty brutal.

I suspect many starting businesses today are expecting better cash flow in the short term then is likely and that they do not have the reserves to carry through this period.

The positive side of starting a business now is that the costs are substantially lower during a time like this, and since many established businesses are suffering, they are contracting and creating competitive opportunities.

tim said...

How long was Luxe alive?

Duncan McGeary said...

I started dating everything in March. When next March rolls around, I'll drop all the non-dated entries.

I'll keep the dated entries around forever, however, since.....they're dated, and people can judge how old they are on their own.

Duncan McGeary said...


I'm not sure prices have come down all that significantly. I think some of the less desirable locations may be much cheaper, the halfway decent locations have come down a bit, but the desirable locations probably haven't dropped more than 10 or 20%.

With the drop in sales, that isn't much. Getting in, it might help, but by the time things turn around again, you can be sure they'll raise the rents.

Everything else is pretty much the same -- utilities, office supplies, etc.

I've been picking up quite a bit of discounted product, but I've always been able to pick up discounted product. I'm not even sure that there is all that much more of it.

So, I think it will have to get much worse, and last much longer, before we'll see what you're talking about.

However, I will say this; any established business that can stay the course and stay out of debt, will have a head start with the next upturn in business.

RDC said...


Not sure I follow your point even a reduction of 10-20% can make a significant difference.

The ability to pick up space without having to do a rebuild can save even more.

The unemployment rate means that it is easier to find qualified workers, at a lower initial rate.

The slow down in business means that suppliers have increased the number and quality of sales and discounts.

The situation also enables one more opportunity to negotiate more favorable terms with vendors.

All of which can add up to a very significant reduction in startup expenses compared to doing a startup in boom times.

The key to starting during a down cycle is the understanding that it will take longer to become cash flow positive, that you better watch your expenses closely and fight for every penny, that you better have sufficient cash reserves to last while the business develops.

This assumes that you have a business plan that is appropriate for both the business and the market it is located in.

Duncan McGeary said...

I hear what you're saying, RDC, but I think the changes aren't all that dramatic, yet. I think it's going to be another couple of years before the really helpful changes take place.

I do think it's a good idea to open when the economy is down, to start small. Make your mistakes when they're small.