Sometimes, it’s necessary to make the decision to close a business. It isn’t easy and it isn’t something that is done without pain and suffering in some form.
Yesterday in Small Business CEO, I read a story about a small business that was calling it quits due to “high oil prices and the economy” (my paraphrase).
A couple of comments in that blog post really rubbed me the wrong way, mostly because the owner appeared to be stuck in a mental trap about the state of the economy (more on that in a minute) and the economic conditions that she felt forced her to close up shop.
A poisoned mind
The first quote was the most poisoned thing I could think of that a business owner could get stuck in their head:
Small home based businesses like mine really donâ??t stand a chance in the current market.
In the Great Depression of the 1930s, more than 25% of Americans were out of work. On the other hand, 75% were employed and continued to buy. While that doesn’t make life easier for the 25%, it does mean that the market didn’t simply disappear, even in times as bad as that.
For every stock broker who leaped from his Wall Street office window, there was at least one who did well, and the same for investors.
The reality is, a lot of businesses got started back then. In the so-called worst of times. In fact many of today’s most successful businesses had their roots in those “bad” days. Krispy Kreme, Saab, T. Rowe Price and many many more local businesses. Try Googling for “founded in 1930”, “founded in 1931” and so on. Tons of new businesses that exist to this day that were started during that period, more than SEVENTY years later.
They didn’t give up or quit because of their state of the economy. They saw opportunity in it.
BUT, thing is, the state of the economy really isn’t the point. Your market, your products, your clients and your prospects are. Your focus, your marketing, your creativity of thought and action. Those are far more important than the state of the market.
Raise prices or quit?
The second quote wasn’t much better, but I do have to admit that I have heard this from other businesses this year – from restaurants to craft-type businesses like this one:
Forced with the decision of either raising my candle prices sky high or temporarily closing, I chose the latter of the two.
The problem with this isn’t a lack of concern for the client, it’s that she is projecting her own mental limitations about her pricing onto her clientele. In other words, she’s saying “No” for them without giving them a chance to consider their purchase.
First of all, everyone understands that prices have gone up with fuel prices, either due to shipping, due to petroleum-based ingredients, or just because those two things roll downhill to the buyer. By making the decision to stop producing items because one of the component prices went up 40% assumes that the clients don’t feel the items are still worth that much without even asking them.
While these are primarily mental issues, there are also practical ones. Because I am tangentially involved in a business that uses beeswax, this isn’t armchair quarterbacking.
Due to Colony Collapse Disorder, I’ve seen 40-50% increases in the price of (among other things) beeswax over the last several years. In fact, prices have done so more than once. What was $3 something a pound is over $5 a pound. Not to mention that beeswax is dense. It’s heavy. Yes, Virginia – it costs a lot to ship.
Yet the clients who buy those beeswax-based products not only haven’t complained, but they’re buying more than ever. We didn’t make the decision for them, we simply raised prices to reflect the economics of the product line and let them decide. They decided to keep buying.
Sometimes quitting is the right thing to do. Just don’t do it for the wrong reasons. Don’t let the pundits, the media and Presidential candidates poison your mind.
Make decisions for the right reasons. I hope she decides to get back in the game for the right reasons as well.