Small businesses close for a number of reasons. Whether a new venture comes along that the owner can’t refuse, or making ends meet just becomes too much, every business has its own story. We asked our small business experts to tell us about businesses they’ve had to close, and what they learned from the process. Here are our favorite answers…
“In the early 2000s, we also ran roughly seven different online stores. We had a site selling wine racks, bar stools on another, and electric scooters on a third. It was a lot of fun, and we used our search engine optimization knowhow to get a majority of the sites to rank very well for their respective search terms. Over the course of five years, we probably generated roughly $8M in revenue. When our core business was acquired, our whole team minus one moved to New York. We left one person back to run the stores, and while he did a great job, we simply didn’t focus on our SEO efforts, and some of the rankings started to dwindle. It was about this time when Amazon.com started its meteoric rise. Their deep discounting as well as their vast selection of products antiquated our online stores pretty quickly.
As an example, we had a website that solely sold alarm clocks. We ranked #1 on Google for ‘alarm clocks’. However, as Amazon grew and offered their Prime service, the normal user would go to Amazon as if it were a search engine for household products instead of Google. It was about this time, when we realized we weren’t giving them the love they needed and decided to gradually shut them down. That said, if there are ever any charity auctions looking for donations, I will still be able to offer nice wine racks for the next 20 years 🙂” -Bill Fish, ReputationManagement.com
“I ran an accounting / software consulting business with a small team from
2000-2009. I loved a lot of it, but also frequently burned out. I craved
the flexibility to travel more (my business was quite location specific –
and deadline driven with tax filing and payroll cutoffs, etc), have less
stress, and lower overhead costs. I wanted to close the business, but also
felt extremely guilty about it.
But then in late 2009 I underwent an experimental medical treatment that
left me with the inability to speak. My neural pathways re-routed and I had
no memory of my accounting knowledge. I ultimately had no choice but to
close the doors. So, I guess my wish came true – but in a fairly dramatic
way.
Most of my long term memory has been recovered since then – but it was a
long journey & in the meantime I was able to create a new portable business
that I’m able to run from anywhere.” -Loralee Hutton, LoraleeHutton.com
“I closed a business several years ago and it was an extremely difficult
decision. My business partner had decided that she no longer wanted to be
involved in the business, and since she was responsible for business
development, I felt that I couldn’t continue without her on board. One of
the major lessons I learned from that was to have a clear vision for the
business and a solid business partner relationship. Things started to not
go well once we did long-term planning and realized that we weren’t on the
same page.
After this business closed, I freelanced for a few years and then met my
current business partner and opened Kick Point in fall 2012. That failed
business taught me many lessons that is helping me be a better business
partner right now.” -Dana DiTomaso, kickpoint.ca
“I owned a Mail Boxes Etc. franchise for almost 5 years and closed it in 2002. The main reason was that I realized I wasn’t cut out to deal with the public day after day in a retail environment. I also was only making enough money to pay the bills and one employee. So that didn’t help either.
It was actually a partial sale and closing. I sold my territory to another new franchisee who moved to another location. I negotiated with the SBA on my small business loan and they forgave some of the debt. If there was a positive to the closing, I got out right before they were bought by UPS who then forced franchisees to convert to The UPS Stores.
As you can see, I am now a financial planner. After completing a financial planning program and passing the CFP exam, I started with another firm and was there for about 6 years. Then in 2012 I went out on my own and am now a solo practitioner and loving it! I still deal with people, but in a much different way.” -Carol Berger, bergerwealthmgt.com
“I succeeded only after I closed. My name is Dr Daniel Margolin I am a podiatrist and my practice today (in terms of size) is in the top 3 percent in the country. This was not the case when I first hung up my shingle in 1987. Strapped with student loan debt I struggled to survive those early years. As my solution to doing poorly I concluded that opening a second practice would allow me access to more patients.. I opened a second practice and quickly realized that if you were unable to manage one practice, two practices simply doubled your stress level and impoverished you at an even faster rate.
Fast forward five years, now at the end of my financial rope I put up my hand and brought in a consulting group. It turned out at the time I knew nothing about running a business. By bringing in a professional business consultant I became aware of the fact that there was an actual technology to running a business. Once I realized that there was something to know, and I didn’t know it, I decided to close my second practice. I realized my time was best spent training in business management, rather then over extending myself in oblivion. Although it was a tough decision, it was the correct one. Now over twenty years later I have a thriving practice and a thriving business consulting company. I even wrote a book about the adventure called Fast Tracking Your Prosperity: 21 Lessons in Professional & Personal Success. Sometimes you have to know when to let go.” -Dr. Dan Margolin, New Jersey Foot & Ankle Center and Effective
“Before starting a career as an executive coach, I was a wedding planner for
7 years. I decided to close the doors on the company as the daily stresses
of planning large weddings began to wear on me. By the time I had learned
how to properly run it, the initial magic of being a wedding planner had
worn off. What I decided to do instead was leverage my business experience
and coach others who are in the same shoes I was in when I started my first
company. I found that I enjoy coaching others achieve business success much
more than I enjoyed running the business itself.
Being a business owner comes with its share of common pitfalls–all of
which I myself committed–and it’s my job to steer new entrepreneurs away
from those common mistakes and move them in the right direction. I find
great joy and meaning in the work that I do.” -Kristie Santana, Coach Academy
“In August of this year I shutdown my home services startup called Haven. I
had raised over $1M to build a mobile and web application to help
homeowners leverage big data to in an effort to predict or anticipate the
needs of their home. After just two short years, without traction or the
ability to raise additional capital, I had to shut it down. I learned that: investor acceptance does not equate to market (customer) acceptance, the importance of seeking direct market data- not just data that supports your vision (confirmation bias), marketing to consumers is an order of magnitude harder than marketing
to businesses, and to solve a single problem and do it really well I’m currently spending my time coaching and consulting with other startups who have either raised money or are attempting to raise money.” -Jim Brown, askjbrown.com
“I was the #1 franchise owner in one franchise called Maui Wowi Smoothies and failed miserably in another concept called Super Suppers.
Super Suppers was a studio kitchen where customers came and used our facility, food and recipes to make dinners in bulk, take them home, freeze them and cook them at a later time when they’re crunched for time.
I learned lots of lessons from that failure and that’s what makes me an expert.
The biggest lesson I learned in Super Suppers is that it is extremely difficult to change people’s habits. In Super Suppers case, the concept made logical sense. Who wouldn’t want to feed their family a home cooked meal instead of ordering pizza…again? The issues became educating people about the concept which took more time and money than I had. Then to try to get them to come to my place instead of going to another fast food drive thru. (I talk about this in my book, Franchise Savvy).
Take away: Don’t start a new business that is a new concept unless you have the time and money to educate and change the habits of potential customers.” -Tom Scarda, Franchise Consultant
“Several years ago I owned and operated a small business, primarily walk-in retail. Some of the work involved going to customers’ sites and installing or repairing hardware there.
One (supposedly) national corporation had me do extensive work at their satellite office in a semi-rural town 30 miles from my shop. My business had to purchase material and supplies in order to complete the job.
It turned out that the people who hired me also hired many other small businesses to do work and provide everything from furniture to coffee. As small business owners, we were anxious to get the business. When we pressed for payment, we were told that checks would be sent from national headquarters, and that payment sometimes was slow.
Eventually the Consumer Protection Agency and the police caught up with the people who were defrauding not only small business owners, but also homeowners who had been seeking low-cost home improvement loans. None of us ever got our money.
I went out of business because I had extended credit to scammers.” -Anonymous
Thank you to all of our small business experts for sharing your experiences.