How Closing a Small Business Can Grow a Better One

by Maggie Wells on 14 October 2011 1 comment
Photo: F33

Sometimes the best way to grow your business can be to close the business. Huh? I wouldn't have thought it was true, but recent developments have shown me otherwise. (See also: How to Get a Groupon Refund When a Company Closes)

My Own Business

I had a small consignment shop that I closed at the end of 2009. The store hadn't lost money...yet. But I could see how it might start to do so. Business was slow, and the secondary purpose I had for it — a space away from home where I could catch up on work at my desk — never came to fruition. I could also tell that my fellow business owners in the shop and I (the store was a second room inside a salon) would have a better chance of remaining good friends if we didn't work together.

Though my business was around less than a year, I learned a lot about what to do and what not to do. I learned not to go into business with friends — especially when the thing you admire most about your friend/business partner will drive you crazy. In our case, I kept coming in seeing all the stuff I'd arranged rearranged. The shop was inside a badly ventilated salon, and I didn't realize how much the smell of acrylic nails would bother this organic-eating, nature-loving person. I would literally have to leave the shop because I was getting dizzy. It didn't seem to bother the rest of the business owners. But by the end of the three quarters of a year I'd spent there, I knew more about where I belonged and what sort of things I can get involved in and what I can't. Valuable lesson.

The best thing about the shop was the used book sales. It seemed I really had a knack for hooking up people with the right book, and I also was a decent book scout at estate sales and thrift stores. I consistently can find the book in the pile of trash that's going to be worth fifty dollars. Armed with all this knowledge, I closed the brick-and-mortar shop and reopened as an Amazon seller specializing in rare books. That part of the business is still going strong, but it's now in my garage. It doesn't make me a lot of money — but it makes me more than the shop ever did.

The Alley Cat Cafe

My favorite coffee house in the entire county closed its doors at the end of February. I'm an adjunct professor with no office space — where was I going to get great coffee and a fast Internet connection? I talked to the owner. Was she crazy? Everyone loved her coffeehouse; she always seemed busy. Why would she close and leave us all stranded? She told me what I'd suspected — the rent on that place was crazy high for our town and was destined to keep going up. She'd have to charge us $10 bucks a latte to break even if she stayed. Meanwhile, there was a theater being built (slowly) in town. The owners of the theater and Julie sat down and talked. Her husband was a contractor, too. There was still more work to be done on the theater before the first play could ever be produced there...and wouldn't that foyer make a great coffeehouse? They worked out a deal that cut Julie's rent in half and gave her more space for more customers to sit.

It didn't happen overnight. While the cafe in the foyer was a great idea, it took awhile to convince the county and to get inspections underway. Julie thought the business would be closed three months, and instead it was closed six months and nearly drained her savings. But she seized the opportunity of free time to plot ways to make the new Alley Cat more successful.

ARTICLE CONTINUES BELOW

Julie turned to community involvement and social networking. With time on her hands, she got busy beautifying the town and meeting with other business owners. She got flower baskets to line our main street to make it more inviting and less of a drive-through space. She researched further into organic foods, and recommitted herself to serving high-quality food and drinks (nay sayers had suggested that if she skimped on ingredients she'd make better profits). She made sure her cafe was searchable on the web, and that those looking to visit and vacation in our area knew where it was and when it was open. She used that time away from the business to reinvent its presence and goals. She's started an Alley Cat Cafe blog to keep on people's radar and so patrons know where she's coming from.

Now Alley Cat is busier than ever. She was able to hire more staff, too!

Chef Jayson

My friend Jayson has the patience of a saint. Rather than go with his dream of being a chef, he went initially with family obligation and started a business with his twin brother. They owned a comic book and gift shop. Slowly my friend realized, seeing his brother's spending, that in a few years my friend was pretty much going to have to carry the whole business venture by himself. He watched as his brother bought classic cars and went on expensive vacation benders to Disney World and Vegas without so much as glancing at his checkbook. All the warning signs were there for significant problems in the future. The more closely he looked, the more he realized that he was alone in saving for a rainy day or business expansion later. As much as he loved the shop, he decided to cut losses early and dissolve the partnership rather than face possible problems down the road.

But Jayson got the taste for business and liked it. Instead of going off to work for someone else, Jayson took his initial training and dream to be a chef to the next level. Even while dissolving the partnership, he began baking again, collecting a portfolio of portraits of his best and yummiest creations. By the time he was out of the first business, he was already building up a loyal following of his desserts for a second business. He moved himself back to his home turf (a very foodie area) and began making connections with other foodies. His new business is fledgling, but he has cake orders already, and everyone who has tasted his creations has clamored for more.

My Local Pet Store

Like the Alley Cat Cafe, the place I buy my pet food closed down earlier this year. It was teetering on the edge of viability, and the owner sold the business to a nearby auto parts store that had also seen a loss of customers due to the economy. Now the auto parts store and pet shop are combined in the same building with one rent to pay. While we'll all miss the old pet shop owner's good nature, it's nice to know the shop is still continuing, and the consolidation makes sense for our small community. Now the old pet shop owner is free to pursue new interests and doesn't have to contend with high rent, and the town keeps its pet shop in a smaller and warmer location.

I would have loved to have seen all these businesses succeed in their original locations with their original game plans, but sometimes it's much more valuable to rethink and meet a goal in away that feels better for the business owner and the community that business serves.

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Leslie

I have a brick and mortar promotional marketing company. After 8 years we are finally looking at going mostly web based. In order to keep competitive in a highly commoditized industry, we have to significantly reduce our overhead. My girlfriend and I also have our own online business – I know what you said about going into business with friends, but we are lucky enough to have been coworkers before becoming friends, so we work very well together. One of the goals of this business is to assist us financially while we look at making changes in our work situations. Everything happens for a reason and what happens next is quite often even better. Thanks for the great post.