The retail start-ups that never

take offBy: Madelaine Cohen

www.lipsticklearning.comwww.lipsticklearning.com

Every since the 1980’s I have created a habit of looking at a new retail storeand rating how long it will be open for. Each time I do this I cringe at thethought of what I am doing and at the same time I can hardly help myself.There is also a sense of grief that yet another small business owner maybecome the victim of getting it all wrong. It’s sad that more than 90% ofnew small businesses fail in the first year.

Today I was driving home and I saw a For Lease sign in the window of a newFruit & Vegetable store in our area. With a lovely shopfit this business ownerwas not shy in spending start up money. Less than six months ago the doorsopened.

So what did I notice six months ago that the owner didn’t?

The cost of starting a small business is huge, and what I find is that so manysmall business start-ups are a job by another name. Businesses are aboutleverage, creating time and maximising return on investment. So oftenpeople ask me for advice relating to starting their own business, and Icannot recall how many business networking meetings and dinners I’ve beento where the hot topic is start-ups. The challenge is that what so manypeople think it a business is actually a job or alternatively the lack of

planning and high level of startup investment has simply been incorrectlyfactored into the reality of how long it will take to be square let aloneprofitable. Meantime the owner needs to survive.

Back to the Fruit & Vegetable store. Rent, overheads. Shopfit. Location,street appeal competition and accessibility. Product, price & stock turns. Sothe 30 second synopsis: The store across the road is a similar size less than100 square metres @ $6K per month. You have to sell lots of $2 herbbunches to pay rent at even half this level. Overheads with 6 fridges wouldbe high in electricity alone. Shopfit would have cost about $50K. Location isin a “no stopping” section of the road. Not a chance customers can run in tograb something in a hurry. Street appeal is low with a high windowpreventing anyone shorter than about 170 cm from seeing in. Accessibility isa side entrance with a natural flow from only one direction, which happensto be the direction least likely to deliver foot traffic. Competition, majorsupermarket is 50 metres away. Well established deli across the road.Product has no differentiation and at the rate of sale my guess is moreperishables will end up in the waste disposal than a customer’s hand. Price ismore expensive than the supermarket for lesser quality. Net result, sixmonths and it’s over. Business is tough. And the store owner will tell yousame when you go in there.

A question I ask is, “what is your highest intention going into your ownbusiness?” The answer so often starts with the words, “I want to be…” and Idon’t need to hear anymore of the sentence to pick up on the presuppositionthat the person is telling me what they are not. Ouch. A business is a vehicleand not a person. So many small businesses reverse this and it could be areason for the high level of start-up failure.

I met an owner of a Sandwich franchise last year. He’d had a successfulalbeit boring corporate career in accounting and decided to go into business.Through a second mortgage on the family home he bought a franchise. Hadhe known at the time how hard the work would be to take home barely $2Kper month in profit he would have never taken the plunge into freeenterprise. Soon enough he realised he was not the only person in the sameposition in his company. The question is if he cannot sell, even to simplybreak even, when will be the right time to cut his losses?

The opportunity to be a business owner needs a reshape in the area of start-ups. Success leaves clues. The best business of this Century is the one thatprovides profit within months and not decades, has a low start upinvestment, serves new fast developing market niches and is low risk. Todaywe have a trusted network in which to do business, we talk virtual and canimmerse ourselves cross-economically into many countries in the world.

Think carefully about these factors. In my mind, and in these times you needto be unbelievably certain before you put your home on the line.

Madelaine Cohen

Lipstick Learning is an initiative of Sydney based businessleader & entrepreneur Madelaine Cohen. Sharing informationto increase the success of people who choose to lead. Withmore than two decades in her own businesses in consumer

products, sports marketing and healthcare Madelaine takes a leading role inhelping people transition from employment to their own business in thehealth, beauty and anti-aging sector. She works on a 100%, 10 x 10, $100Kmodel leading people to success and an income of $100K per year or morein their own business.

Follow @madelainecohen

Visit http://lipsticklearning.com/enough-abuse/ to know more information.

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