Wednesday, November 16, 2011

How many breweries will the market absorb?

It's interesting to watch the ebb and flow of business trends -- children's clothing stores seem to pop up everywhere, tattoo parlors even more so, and now beer breweries.

We won't know if there are too many breweries until one too many breweries opens, right? That last drink which makes you clumsy.

And that will happen.

I've seen it in my own business. There was a time when there was a sports card shop on every corner. Too many comic stores, too many game stores. I actually saw a pog store open, and saw several businesses who seemed to depend on beanie babies. There are two reptile shops in Bend. Really, is there a need for two?

I've also seen over and over again, successful businesses expand and multiply, and then come crashing down.

Hey, I did it myself. Four stores, two in Bend, one in Redmond and one in Sisters. What was I thinking?

McGeary's corollary to the Peter Principle. A business will expand to its level of incompetence.

The article this morning about golfer's not showing up because of the stock market volatility?

You know what? If your business depends on a stable stock market, you're in the wrong business.

My advice nowadays would be to make your business solid, build in a margin of error, and if you've done all that first, then think about expanding. However, if you expand, it probably makes more sense to get really big, instead of slightly larger. You may fail, but at least the payoff if you succeed will be there. If you get only slightly bigger, the workload increases exponentially, and the monetary payoff will be tied up in the expansion.

Can you say the word -- burnout? Can you say the words -- risky finances?

At the same time, you won't be doing those little things that made your business a success in the first place. You won't have time. You'll have to succeed being bigger by doing things differently.

You'll be in an office, instead of on the floor. Meeting lawyers, instead of customers.

It will be a different thing altogether. I know it is the American way. But is that what you really want?

A lot of small business owners open business because they want to be in control, to make their own decisions, and to do things their way.

The bigger you get, the less that is true.

Just saying, watch out what you wish for.

16 comments:

Bewert said...

From Csacade Business News:

"For more information and to get involved, visit www.stopthedrain.org"

It's amazing how dysfunctional a community can be.

Good luck.

H. Bruce Miller said...

Yoga is another bubble that I sense is destined to pop soon. The Source last week had a special section devoted to yoga. It listed 14 yoga studios in town. Pretty astonishing for a city of 78,000, give or take.

Anonymous said...

Yet another example of being over leveraged ..

http://www.tsweekly.com/former-blacksmith-and-bourbon-street-owner-files-for-bankruptcy.html

Debt rarely is a good thing.

H. Bruce Miller said...

Bend restaurateur Gavin McMichael files for bankruptcy: http://www.tsweekly.com/8921-blacksmith-founder-files-for-bankruptcy.html

More evidence that this town isn't as "upscale" as it pretends to be, and that it can't support quality restaurants now that all that real estate money isn't sloshing around anymore.

H. Bruce Miller said...

78,000 people / 14 yoga studios = approx. one yoga studio for every 5,500 residents. Might not look like much, but the population total includes old folks, babies, disabled and sick people -- and a hell of a lot of people who don't have the money and/or time for yoga classes.

Anonymous said...

$2.5M - Gavin McMichael - It's a personal bankruptcy of a guy who clearly lived way beyond his means. Happens all the time. Personal bankruptcy has been on the rise for a long time. A mentality of borrowing for instant gratification. A negative savings rate. Obesisty, diabetes and debt will be the down fall of this nation.

Duncan McGeary said...

I'm letting this pass as an opinion.

I don't know what happened.

Duncan McGeary said...

O.K. Went and read the Source article.

I can't see how he can keep the restaurants open.

How can one get in that much debt?
How much money is floating around, anyway?

I obviously think too small.

I live in some parallel universe, I guess. In my universe we talk about hundreds of dollars, or thousands of dollars, maybe -- if I was really being risky, tens of thousands of dollars.

2.5 million? Really!?

Anonymous said...

Is his debt tied up in the restaurants assets? Or is most of it just personal debt outside (i.e. car, home)?

Duncan McGeary said...

In Bend?
How many meals is 2.5 million?

Anonymous said...

Personal..

http://www.ktvz.com/news/29790523/detail.html

Anonymous said...

"a guy who clearly lived way beyond his means"

??!

"Living beyond your means" includes driving a car valued at $2000, and not really having many other personal assets? Cut the guy some slack.

Duncan McGeary said...

So I don't get that.

On one side of the ledger you got personal assets of a foreclosed house, a 2001 pickup, the cloths on his back I assume, and whatever else luxuries he's been buying with 1500.00 take home.

On that side, he want's to declare bankruptcy. Piling on 2.5 million in debt, most of which sound like they were incurred by very strange things for a personal bankruptcy, like "food vendors".

On the other side of the ledger are two nice restaurants, one almost brand new.

But, you know, NO debt.


Uh....don't think that's going to work.

Duncan McGeary said...

I'm guessing there are some strong opinions on this, because neither KTVZ or The Source are allowing comments.

How Did I Get Here? said...

Folks are throwing the last bit of cash and credit they have at buying themselves a job. I think a lot of people are faced with the choice of having to leave the area to find work or creating a job for themselves. I have to think that our population will eventually settle back to 55-60K because unless you bring your money with you, it's a very tough place to get any traction. Some people have no place to go but others will find shelter in a relative's home once they run out of options.

Anonymous said...

To understand the brew-biz you need to think about pre-prohibition,

During pre-prohib there was a homebrew bar on every corner and a beer was a nickel or less,

Then during pro-hib it all went to bath-tub in the home and public drinking ended, Post pro-hib the BIG chemical companys started selling 'beer' in the stores and people just drank at home,

What's happening is we-re returning to the good old days of CHEAP REAL NATIVE AMERICAN ALE near the home and publik place where people ( think irish ) can have fun, ...

So once you understand what's happening, you can see that there can be 100's of micro-brewpubs in Bend and there will be NO problem, so long as their managed as family or solo like you do, its the EMPLOYEES that kill the small biz, that's why if you look at deschutes they're dying cuz people can no longer drive to the BAR cuz of DUI in Bend. Back crawling to the pub, or maybe even back to the horse(think klusterfuck).